Magellan Health Services announces projected 2010 revenue and earnings growth

Magellan Health Services, Inc. (Nasdaq:MGLN) today announced that, for 2010, it expects to generate net revenue in the range of $3.0 billion to $3.2 billion, net income in the range of $95.5 million to $115.0 million, and earnings per share in the range of $2.73 to $3.29 on a diluted basis. 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 2010 is estimated in the range of $235 million to $255 million.

The Company raised its guidance for 2009 to net income in the range of $98.1 million to $104.4 million, earnings per share in the range of $2.77 to $2.95 on a diluted basis, and segment profit in the range of $220 million to $230 million.

As part of its current $100 million share repurchase authorization, the Company purchased approximately 782,000 shares at a total cost of approximately $25.6 million through yesterday’s close of business. The 2009 and 2010 guidance and earnings per share projections reflect the impact of such purchases, but exclude the impact of potential future repurchases.

Cash flow from operations is expected to be in the range of $175 million to $211 million in 2010, with a net increase in unrestricted cash and investments of $127 million to $173 million by the end of 2010, excluding the impact of any further share repurchases. See the attached tables detailing the Company’s 2010 financial guidance.

René Lerer, M.D., chairman and chief executive officer, said, “I am pleased with our revised outlook for 2009 and with the strength of our guidance for 2010. We are projecting revenue growth across all lines of business and, for the first time, total revenues in excess of $3 billion. Our 2010 guidance highlights the success of our growth initiatives, including acquisitions, new business sales, and product development. Looking ahead, we expect to generate additional opportunities for new business as more health plans and states seek innovative solutions within specialty health care.”

Karen S. Rohan, president, also emphasized the Company’s growth prospects, saying, “The key priority for 2010 is the execution of our growth plans. This is driven by our ability to successfully acquire and implement new business, manage existing accounts with exceptional service delivery, and create new and innovative products. We expect that 2010 will present a number of key opportunities across our lines of business, and we are optimistic that these initiatives, coupled with continued efforts in care management, will yield positive results.”

“In our specialty pharmacy segment, we are experiencing increased customer interest, particularly for our innovative oncology management program. Oncology specialty drugs have emerged as a top driver of specialty drug spend, with some recently approved drugs costing in excess of $30,000 per month. These trends have underscored the importance of proper drug selection, dosing, and the clinical management offered by our product.”

Speaking to growth opportunities in other segments, Rohan said, “Within the radiology segment, our pipeline remains quite active, including significant interest within the Medicaid market. Recent high-profile attention on the topic of radiation exposure has provided us with an opportunity to highlight the need for responsible oversight that safeguards the clinical appropriateness of imaging tests, thereby heightening interest in our services.

“The acquisition of First Health Services in July of this year speaks directly to our expanding capabilities in serving the Medicaid population, and we are continuing to review and enhance our product lines and ongoing capabilities to respond most effectively to this growing market segment,” Rohan added.

Jonathan N. Rubin, chief financial officer, said, “The projected 2010 revenue and earnings growth demonstrate the strength of our business and success in execution of our strategy. Our consistently strong cash flow and financial stability continue to allow us the flexibility to efficiently deploy capital to fund growth initiatives and maximize return to shareholders.”

SOURCE Magellan Health Services, Inc.