[July 29, 2016] |
|
Magellan Health Reports Second Quarter 2016 Financial Results
Magellan
Health, Inc. (NASDAQ: MGLN) today reported financial results for the
second quarter of 2016, as summarized below. For the quarter ended June
30, 2016, the company reported net revenue of $1.16 billion, segment
profit of $56.9 million, and net income of $4.0 million, or $0.16 per
diluted common share. In addition, the company reported adjusted net
income of $14.4 million and adjusted earnings per share of $0.58. As of
June 30, 2016, the company had unrestricted cash and investments of
$236.3 million.
|
Second Quarter Financial Results*
|
|
|
|
Three Months Ended June 30
|
|
|
Six Months Ended June 30
|
|
|
|
|
|
|
Inc/
|
|
|
|
|
|
|
Inc/
|
(Millions, except per share results)
|
|
2016
|
|
2015
|
|
(Dec)
|
|
|
2016
|
|
2015
|
|
(Dec)
|
Net Revenue
|
|
$
|
1,164.3
|
|
$
|
1,157.6
|
|
0.6
|
%
|
|
|
$
|
2,281.4
|
|
$
|
2,138.6
|
|
6.7
|
%
|
Segment Profit*
|
|
|
56.9
|
|
|
53.2
|
|
7.0
|
%
|
|
|
|
116.8
|
|
|
118.1
|
|
(1.1
|
)%
|
Net Income
|
|
|
4.0
|
|
|
4.6
|
|
(13.0
|
)%
|
|
|
|
17.2
|
|
|
11.9
|
|
44.5
|
%
|
Adjusted Net Income*
|
|
|
14.4
|
|
|
14.7
|
|
(2.0
|
)%
|
|
|
|
33.8
|
|
|
39.1
|
|
(13.6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per Share
|
|
|
0.16
|
|
|
0.17
|
|
(5.9
|
)%
|
|
|
|
0.70
|
|
|
0.45
|
|
55.6
|
%
|
Adjusted Earnings per Share*
|
|
|
0.58
|
|
|
0.56
|
|
3.6
|
%
|
|
|
|
1.38
|
|
|
1.47
|
|
(6.1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Refer to the Basis of Presentation for a discussion of non-GAAP
financial measures.
|
|
Variances for the three months ended June 30, 2016 versus June 30, 2015:
-
The increase in revenue between periods is attributable to the impact
of new business and same store growth, as well as revenue from The
Management Group (TMG) acquisition, which were partially offset by the
loss of revenues associated with terminated contracts.
-
The increase in segment profit is primarily due to the impact of new
business, net same store growth, strong earnings in our Pharmacy
business, and the inclusion of TMG's results in the current quarter,
partially offset by the impact of contract terminations. In addition,
the current quarter includes a loss of approximately $4.5 million from
our Part D Plan, most of which we project to be timing-related as a
result of benefit seasonality in the first half of the year. Included
in segment profit this quarter is approximately $2 million of net
favorable non-recurring items. This is mainly related to $5.5 million
of favorable prior period medical claims development in the Healthcare
segment, partially offset by one-time corporate costs related to the
Armed Forces Services Corporation (AFSC) and TMG acquisitions, as well
as severance expense.
-
In addition to the items affecting adjusted net income explained
below, the change in net income between periods also reflects lower
contingent consideration expense and stock compensation expense
related to acquisitions, partially offset by a $4.8 million impairment
of acquisition intangibles in the current quarter. This reflects the
full impairment of the Fully Integrated Duals Advantage (FIDA) and
Medicare Advantage customer contract intangibles recorded for the
investment in AlphaCare.
-
The change in adjusted net income between periods was mainly due to a
higher effective income tax rate, offset by higher segment profit in
the current quarter.
"During the second quarter, we experienced strong financial results and
sales across all of our Pharmacy markets, while remaining focused on a
number of strategic efforts to continue driving growth and customer
results," said Barry M. Smith, chairman and chief executive officer of
Magellan Health. "In our Healthcare business, the second quarter results
were solid and reflect continued progress in executing our key
priorities."
Results and Outlook
"I'm encouraged by the strong sales results and pipeline in both our
Healthcare and Pharmacy businesses, and believe we are on track to meet
our full-year financial objectives," said Jonathan N. Rubin, chief
financial officer of Magellan Health. "We closed on an additional $200
million term loan on June 27, 2016. The purpose of this facility was to
provide funds to address capital needs for the AFSC acquisition, Part D
Plan receivables, and for contingent consideration payments. This term
loan matures on December 29, 2017.
"We are revising our guidance to reflect the impact of the AFSC
acquisition, the impairment of AlphaCare contract intangible assets,
higher than anticipated Pharmacy revenues and recent share repurchases.
We now expect revenue to be in the range of $4.76 to $5.00 billion and
segment profit to be in the range of $271 to $291 million. We are
revising our expectation of net income to be $49 to $68 million, with
EPS between $1.99 and $2.77 per share. Adjusted net income is expected
to be between $85 and $104 million, with adjusted EPS between $3.45 and
$4.22. EPS and adjusted EPS are based on average fully diluted shares of
24.6 million. This updated share count reflects share repurchases and
option exercises through July 27, 2016, but excludes any potential
future activity. In addition, we are revising our guidance for cash flow
from operations to a range of $104 million to $135 million, due to the
acquisition of AFSC.
"Compared to the first half of 2016, we expect the second half of the
year to produce stronger segment profit due to the seasonality and
timing of care results and customer settlements, mainly in our
Healthcare business, normal earnings seasonality in our Part D Plan, the
impact of new business growth across our businesses, improved care
management results, primarily in MCC of Florida, and the impact of the
AFSC and TMG acquisitions."
Earnings Conference Call
Management will host a conference call at 10:00 a.m. Eastern on Friday,
July 29, 2016. To participate in the conference call, interested parties
should call 1-800-857-1812 and reference the pass code Second Quarter
2016 Earnings Call 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 MagellanHealth.com.
About Magellan Health: Headquartered in Scottsdale, Ariz., Magellan
Health, Inc. is a leader in managing the fastest growing, most
complex areas of health, including special populations, complete
pharmacy benefits and other specialty areas of healthcare. Magellan
develops innovative solutions that combine advanced analytics, agile
technology and clinical excellence to drive better decision making,
positively impact health outcomes and optimize the cost of care for the
members we serve - all within a customer-first culture. Magellan's
customers include health plans and other managed care organizations,
employers, labor unions, various military and governmental agencies and
third-party administrators. For more information, visit MagellanHealth.com.
Basis of Presentation
In addition to results determined under Generally Accepted Accounting
Principles (GAAP), Magellan provides certain non-GAAP financial measures
that management believes are useful in assessing the company's
performance. Following is a description of these important non-GAAP
measures.
Segment profit is equal to net revenues less the sum of cost of care,
cost of goods sold, direct service costs and other operating expenses,
and includes income from unconsolidated subsidiaries, but excludes
segment profit or loss from non-controlling interests held by other
parties, stock compensation expense, as well as changes in the fair
value of contingent consideration recorded in relation to acquisitions.
Adjusted net income and adjusted earnings per share reflect certain
adjustments made for acquisitions completed after January 1, 2013 to
exclude non-cash stock compensation expense resulting from restricted
stock purchases by sellers, changes in the fair value of contingent
consideration, as well as amortization of identified acquisition
intangibles.
Included in the tables issued with this press release are the
reconciliations from non-GAAP measures to the corresponding GAAP
measures.
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 updated 2016 guidance for
revenue, segment profit, net income, earnings per share, adjusted net
income, adjusted earnings per share and cash flow from operations,
expected increased segment profit run rate for the remainder of 2016,
growth opportunities and strategy. 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 healthcare 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,
2015, filed with the Securities and Exchange Commission on February 29,
2016, and the company's subsequent Quarterly Reports on Form 10-Q filed
during 2016. 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,
adjusted net income, and adjusted EPS information referred to herein may
be considered a non-GAAP financial measure. Further information
regarding these measures, 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.
MAGELLAN HEALTH, INC. AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
(Unaudited)
|
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2015
|
|
2016 (1)
|
|
2015
|
|
2016 (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue:
|
|
|
|
|
|
|
|
|
Managed care and other
|
|
$
|
776,240
|
|
|
$
|
699,861
|
|
|
$
|
1,524,890
|
|
|
$
|
1,376,322
|
|
PBM and dispensing
|
|
|
381,367
|
|
|
|
464,484
|
|
|
|
613,685
|
|
|
|
905,045
|
|
Total net revenue
|
|
|
1,157,607
|
|
|
|
1,164,345
|
|
|
|
2,138,575
|
|
|
|
2,281,367
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
Cost of care
|
|
|
568,288
|
|
|
|
472,529
|
|
|
|
1,090,616
|
|
|
|
930,160
|
|
Cost of goods sold
|
|
|
361,409
|
|
|
|
436,930
|
|
|
|
579,616
|
|
|
|
852,389
|
|
Direct service costs and other operating expenses (2)(3)(4)
|
|
|
191,455
|
|
|
|
214,077
|
|
|
|
395,905
|
|
|
|
406,533
|
|
Depreciation and amortization
|
|
|
25,022
|
|
|
|
25,580
|
|
|
|
48,518
|
|
|
|
50,587
|
|
Interest expense
|
|
|
1,653
|
|
|
|
1,994
|
|
|
|
3,279
|
|
|
|
3,742
|
|
Interest income
|
|
|
(500
|
)
|
|
|
(692
|
)
|
|
|
(966
|
)
|
|
|
(1,375
|
)
|
Total costs and expenses
|
|
|
1,147,327
|
|
|
|
1,150,418
|
|
|
|
2,116,968
|
|
|
|
2,242,036
|
|
Income before income taxes
|
|
|
10,280
|
|
|
|
13,927
|
|
|
|
21,607
|
|
|
|
39,331
|
|
Provision for income taxes
|
|
|
5,987
|
|
|
|
12,615
|
|
|
|
10,120
|
|
|
|
24,628
|
|
Net income
|
|
|
4,293
|
|
|
|
1,312
|
|
|
|
11,487
|
|
|
|
14,703
|
|
Less: net loss attributable to non-controlling interest
|
|
|
(350
|
)
|
|
|
(2,646
|
)
|
|
|
(444
|
)
|
|
|
(2,492
|
)
|
Net income attributable to Magellan Health, Inc.
|
|
$
|
4,643
|
|
|
$
|
3,958
|
|
|
$
|
11,931
|
|
|
$
|
17,195
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding - basic
|
|
|
25,684
|
|
|
|
23,516
|
|
|
|
25,502
|
|
|
|
23,570
|
|
Weighted average number of common shares outstanding - diluted
|
|
|
26,776
|
|
|
|
24,546
|
|
|
|
26,588
|
|
|
|
24,517
|
|
|
|
|
|
|
|
|
|
|
Net income per common share attributable to Magellan Health, Inc. -
basic
|
|
$
|
0.18
|
|
|
$
|
0.17
|
|
|
$
|
0.47
|
|
|
$
|
0.73
|
|
Net income per common share attributable to Magellan Health, Inc. -
diluted
|
|
$
|
0.17
|
|
|
$
|
0.16
|
|
|
$
|
0.45
|
|
|
$
|
0.70
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
4,293
|
|
|
$
|
1,312
|
|
|
$
|
11,487
|
|
|
$
|
14,703
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
Unrealized (losses) gains on available-for-sale securities (5)
|
|
|
(93
|
)
|
|
|
(2
|
)
|
|
|
(24
|
)
|
|
|
236
|
|
Comprehensive income
|
|
|
4,200
|
|
|
|
1,310
|
|
|
|
11,463
|
|
|
|
14,939
|
|
Less: comprehensive (loss) income attributable to non-controlling
interest
|
|
|
(350
|
)
|
|
|
(2,646
|
)
|
|
|
(444
|
)
|
|
|
(2,492
|
)
|
Comprehensive income attributable to Magellan Health, Inc.
|
|
$
|
4,550
|
|
|
$
|
3,956
|
|
|
$
|
11,907
|
|
|
$
|
17,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) For a more detailed discussion of Magellan Health's results
for the quarterly period ended June 30, 2016, refer to the
Company's quarterly report on Form 10-Q, which will be filed with
the SEC on, or shortly after, Friday, July 29, 2016, and the live
broadcast or taped replay of the Company's earnings conference
call on Friday, July 29, 2016, which will be available at MagellanHealth.com.
|
|
(2) Includes stock compensation expense of $13,795 and $9,510 for
the three months ended June 30, 2015 and 2016, respectively, and
$27,696 and $18,397 for the six months ended June 30, 2015 and 2016,
respectively.
|
|
(3) Includes changes in fair value of contingent consideration of
$2,567 and $463 for the three months ended June 30, 2015 and 2016,
respectively, and $17,536 and $197 for the six months ended June 30,
2015 and 2016, respectively.
|
|
(4) Includes impairment of intangible assets of $4,800 for the three
and six months ended June 30, 2016.
|
|
(5) Net of income tax (benefit) provision of $(48) and $1 for the
three months ended June 30, 2015 and 2016, respectively, and $(2)
and $147 for the six months ended June 30, 2015 and 2016,
respectively.
|
|
|
|
|
|
|
|
|
|
|
MAGELLAN HEALTH, INC. AND SUBSIDIARIES
|
NON-GAAP MEASURES
|
(Unaudited)
|
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2015
|
|
2016 (1)
|
|
2015
|
|
2016 (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
|
|
$
|
14,722
|
|
|
$
|
14,351
|
|
|
$
|
39,106
|
|
|
$
|
33,780
|
|
Adjusted for acquisitions starting in 2013
|
|
|
|
|
|
|
|
|
Stock compensation relating to acquisitions
|
|
|
(8,498
|
)
|
|
|
(4,556
|
)
|
|
|
(16,836
|
)
|
|
|
(9,112
|
)
|
Changes in fair value of contingent consideration
|
|
|
(2,567
|
)
|
|
|
(463
|
)
|
|
|
(17,536
|
)
|
|
|
(197
|
)
|
Amortization of acquired intangibles
|
|
|
(5,260
|
)
|
|
|
(5,509
|
)
|
|
|
(9,643
|
)
|
|
|
(11,289
|
)
|
Impairment of intangible assets, net of non-controlling interest
|
|
|
-
|
|
|
|
(3,936
|
)
|
|
|
-
|
|
|
|
(3,936
|
)
|
Tax impact
|
|
|
6,246
|
|
|
|
4,071
|
|
|
|
16,840
|
|
|
|
7,949
|
|
Net income attributable to Magellan Health, Inc.
|
|
$
|
4,643
|
|
|
$
|
3,958
|
|
|
$
|
11,931
|
|
|
$
|
17,195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EPS
|
|
$
|
0.56
|
|
|
$
|
0.58
|
|
|
$
|
1.47
|
|
|
$
|
1.38
|
|
Adjusted for acquisitions starting in 2013
|
|
|
|
|
|
|
|
|
Stock compensation relating to acquisitions
|
|
|
(0.32
|
)
|
|
|
(0.19
|
)
|
|
|
(0.63
|
)
|
|
|
(0.37
|
)
|
Changes in fair value of contingent consideration
|
|
|
(0.10
|
)
|
|
|
(0.02
|
)
|
|
|
(0.66
|
)
|
|
|
(0.01
|
)
|
Amortization of acquired intangibles
|
|
|
(0.20
|
)
|
|
|
(0.22
|
)
|
|
|
(0.36
|
)
|
|
|
(0.46
|
)
|
Impairment of intangible assets, net of non-controlling interest
|
|
|
-
|
|
|
|
(0.16
|
)
|
|
|
-
|
|
|
|
(0.16
|
)
|
Tax impact
|
|
|
0.23
|
|
|
|
0.17
|
|
|
|
0.63
|
|
|
|
0.32
|
|
Net income per common share attributable to Magellan Health, Inc. -
diluted
|
|
$
|
0.17
|
|
|
$
|
0.16
|
|
|
$
|
0.45
|
|
|
$
|
0.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 2016 will be filed with the SEC on, or shortly
after, Friday, July 29, 2016.
|
|
|
MAGELLAN HEALTH, INC. AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
2015
|
|
2016 (1)
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
Net income
|
|
$
|
11,487
|
|
|
$
|
14,703
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
|
48,518
|
|
|
|
50,587
|
|
Non-cash impairment of intangible assets
|
|
|
-
|
|
|
|
4,800
|
|
Non-cash interest expense
|
|
|
197
|
|
|
|
204
|
|
Non-cash stock compensation expense
|
|
|
27,696
|
|
|
|
18,397
|
|
Non-cash income tax (benefit) provision
|
|
|
(3,323
|
)
|
|
|
1,570
|
|
Non-cash amortization on investments
|
|
|
2,966
|
|
|
|
3,147
|
|
Cash flows from changes in assets and liabilities, net of effects
from acquisitions of businesses:
|
|
|
|
|
Restricted cash (2)
|
|
|
84,004
|
|
|
|
53,528
|
|
Accounts receivable, net
|
|
|
(32,064
|
)
|
|
|
(74,430
|
)
|
Pharmaceutical inventory
|
|
|
(2,919
|
)
|
|
|
(12,246
|
)
|
Other assets
|
|
|
(31,551
|
)
|
|
|
(56,460
|
)
|
Accounts payable and accrued liabilities
|
|
|
(72,439
|
)
|
|
|
14,050
|
|
Medical claims payable and other medical liabilities
|
|
|
45,544
|
|
|
|
(34,460
|
)
|
Contingent consideration
|
|
|
36,245
|
|
|
|
(50,904
|
)
|
Tax contingencies
|
|
|
(578
|
)
|
|
|
647
|
|
Deferred credits and other long-term liabilities
|
|
|
(1,059
|
)
|
|
|
663
|
|
Other
|
|
|
(48
|
)
|
|
|
23
|
|
Net cash provided by (used in) operating activities
|
|
|
112,676
|
|
|
|
(66,181
|
)
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
Capital expenditures
|
|
|
(37,653
|
)
|
|
|
(30,522
|
)
|
Acquisitions and investments in businesses, net of cash acquired
|
|
|
(55,943
|
)
|
|
|
(16,050
|
)
|
Purchase of investments
|
|
|
(293,348
|
)
|
|
|
(211,061
|
)
|
Maturity of investments
|
|
|
215,984
|
|
|
|
246,786
|
|
Net cash used in investing activities
|
|
|
(170,960
|
)
|
|
|
(10,847
|
)
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
Proceeds from issuance of debt
|
|
|
-
|
|
|
|
225,000
|
|
Payments to acquire treasury stock
|
|
|
(68,783
|
)
|
|
|
(25,458
|
)
|
Proceeds from exercise of stock options and warrants
|
|
|
49,170
|
|
|
|
9,691
|
|
Payments on long-term debt and capital lease obligations
|
|
|
(8,299
|
)
|
|
|
(9,401
|
)
|
Payments on contingent consideration
|
|
|
(4,439
|
)
|
|
|
(39,958
|
)
|
Tax benefit from exercise of stock options and vesting of stock
awards
|
|
|
3,774
|
|
|
|
472
|
|
Other
|
|
|
(616
|
)
|
|
|
(94
|
)
|
Net cash (used in) provided by financing activities
|
|
|
(29,193
|
)
|
|
|
160,252
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(87,477
|
)
|
|
|
83,224
|
|
Cash and cash equivalents at beginning of period
|
|
|
255,303
|
|
|
|
115,432
|
|
Cash and cash equivalents at end of period
|
|
$
|
167,826
|
|
|
$
|
198,656
|
|
|
|
|
|
|
|
|
|
|
(1) The Company's Quarterly Report on Form 10-Q for the quarterly
period June 30, 2016 will be filed with the SEC on, or shortly
after, Friday, July 29, 2016.
|
|
(2) Includes the net shift of restricted funds between cash and
investments that results in an operating cash flow change that is
directly offset by an investing cash flow change. During the six
months ended June 30, 2015 and 2016, restricted cash of $63,167 and
$(31,359), respectively, was shifted to (from) restricted
investments that resulted in an operating cash flow source (use).
|
|
|
MAGELLAN HEALTH, INC. AND SUBSIDIARIES
|
CONSOLIDATED OPERATING RESULTS BY BUSINESS SEGMENT
|
(Unaudited)
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2015
|
|
2016 (1)
|
|
2015
|
|
2016 (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Healthcare
|
|
|
|
|
|
|
|
|
Managed care and other net revenue
|
|
$
|
722,471
|
|
|
$
|
637,970
|
|
|
$
|
1,422,064
|
|
|
$
|
1,256,898
|
|
Cost of care
|
|
|
568,288
|
|
|
|
472,529
|
|
|
|
1,090,621
|
|
|
|
930,160
|
|
Direct service costs and other
|
|
|
108,789
|
|
|
|
123,668
|
|
|
|
221,509
|
|
|
|
232,968
|
|
Stock compensation expense (2)
|
|
|
(1,784
|
)
|
|
|
(2,451
|
)
|
|
|
(4,972
|
)
|
|
|
(4,470
|
)
|
Changes in fair value of contingent consideration (2)
|
|
|
(71
|
)
|
|
|
(390
|
)
|
|
|
(171
|
)
|
|
|
(70
|
)
|
Impairment of intangible assets (2)
|
|
|
-
|
|
|
|
(4,800
|
)
|
|
|
-
|
|
|
|
(4,800
|
)
|
Non-controlling interest - segment profit (loss) (3)
|
|
|
(273
|
)
|
|
|
(1,305
|
)
|
|
|
(393
|
)
|
|
|
(1,136
|
)
|
Healthcare segment profit
|
|
|
47,522
|
|
|
|
50,719
|
|
|
|
115,470
|
|
|
|
104,246
|
|
Allocated corporate costs (4)
|
|
|
15,990
|
|
|
|
16,297
|
|
|
|
31,738
|
|
|
|
32,614
|
|
Healthcare segment profit after corporate allocations
|
|
|
31,532
|
|
|
|
34,422
|
|
|
|
83,732
|
|
|
|
71,632
|
|
|
|
|
|
|
|
|
|
|
Pharmacy Management
|
|
|
|
|
|
|
|
|
Managed care and other net revenue
|
|
|
53,782
|
|
|
|
61,975
|
|
|
|
102,850
|
|
|
|
119,552
|
|
PBM and dispensing revenue
|
|
|
408,924
|
|
|
|
495,399
|
|
|
|
667,717
|
|
|
|
965,633
|
|
Cost of care
|
|
|
-
|
|
|
|
-
|
|
|
|
(5
|
)
|
|
|
-
|
|
Cost of goods sold
|
|
|
387,828
|
|
|
|
466,637
|
|
|
|
631,366
|
|
|
|
910,586
|
|
Direct service costs and other
|
|
|
56,753
|
|
|
|
60,102
|
|
|
|
120,850
|
|
|
|
116,733
|
|
Stock compensation expense (2)
|
|
|
(10,339
|
)
|
|
|
(5,548
|
)
|
|
|
(19,744
|
)
|
|
|
(10,970
|
)
|
Changes in fair value of contingent consideration (2)
|
|
|
(2,496
|
)
|
|
|
(73
|
)
|
|
|
(17,365
|
)
|
|
|
(127
|
)
|
Pharmacy Management segment profit
|
|
|
30,960
|
|
|
|
36,256
|
|
|
|
55,465
|
|
|
|
68,963
|
|
Allocated corporate costs (4)
|
|
|
4,285
|
|
|
|
3,984
|
|
|
|
8,421
|
|
|
|
8,194
|
|
Pharmacy Management segment profit after corporate allocations
|
|
|
26,675
|
|
|
|
32,272
|
|
|
|
47,044
|
|
|
|
60,769
|
|
|
|
|
|
|
|
|
|
|
Corporate and Other (including eliminations)
(5)
|
|
|
|
|
|
|
|
|
Managed care and other net revenue eliminations
|
|
|
(13
|
)
|
|
|
(84
|
)
|
|
|
(24
|
)
|
|
|
(128
|
)
|
PBM and dispensing revenue eliminations
|
|
|
(27,557
|
)
|
|
|
(30,915
|
)
|
|
|
(54,032
|
)
|
|
|
(60,588
|
)
|
Cost of care eliminations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Cost of goods sold eliminations
|
|
|
(26,419
|
)
|
|
|
(29,707
|
)
|
|
|
(51,750
|
)
|
|
|
(58,197
|
)
|
Corporate and eliminations
|
|
|
25,913
|
|
|
|
30,307
|
|
|
|
53,546
|
|
|
|
56,832
|
|
Stock compensation expense (2)
|
|
|
(1,672
|
)
|
|
|
(1,511
|
)
|
|
|
(2,980
|
)
|
|
|
(2,957
|
)
|
Non-controlling interest - segment profit (loss) (3)
|
|
|
(77
|
)
|
|
|
(7
|
)
|
|
|
(51
|
)
|
|
|
(11
|
)
|
Corporate and Other (including eliminations)
|
|
|
(25,315
|
)
|
|
|
(30,081
|
)
|
|
|
(52,821
|
)
|
|
|
(56,383
|
)
|
Allocated corporate costs (4)
|
|
|
(20,275
|
)
|
|
|
(20,281
|
)
|
|
|
(40,159
|
)
|
|
|
(40,808
|
)
|
Corporate costs and eliminations after corporate allocations
|
|
|
(5,040
|
)
|
|
|
(9,800
|
)
|
|
|
(12,662
|
)
|
|
|
(15,575
|
)
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
Managed care and other net revenue
|
|
|
776,240
|
|
|
|
699,861
|
|
|
|
1,524,890
|
|
|
|
1,376,322
|
|
PBM and dispensing revenue
|
|
|
381,367
|
|
|
|
464,484
|
|
|
|
613,685
|
|
|
|
905,045
|
|
Cost of care
|
|
|
568,288
|
|
|
|
472,529
|
|
|
|
1,090,616
|
|
|
|
930,160
|
|
Cost of goods sold
|
|
|
361,409
|
|
|
|
436,930
|
|
|
|
579,616
|
|
|
|
852,389
|
|
Direct service costs and other
|
|
|
191,455
|
|
|
|
214,077
|
|
|
|
395,905
|
|
|
|
406,533
|
|
Stock compensation expense (2)
|
|
|
(13,795
|
)
|
|
|
(9,510
|
)
|
|
|
(27,696
|
)
|
|
|
(18,397
|
)
|
Changes in fair value of contingent consideration (2)
|
|
|
(2,567
|
)
|
|
|
(463
|
)
|
|
|
(17,536
|
)
|
|
|
(197
|
)
|
Impairment of intangible assets (2)
|
|
|
-
|
|
|
|
(4,800
|
)
|
|
|
-
|
|
|
|
(4,800
|
)
|
Non-controlling interest - segment profit (loss) (3)
|
|
|
(350
|
)
|
|
|
(1,312
|
)
|
|
|
(444
|
)
|
|
|
(1,147
|
)
|
Consolidated segment profit
|
|
$
|
53,167
|
|
|
$
|
56,894
|
|
|
$
|
118,114
|
|
|
$
|
116,826
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of segment profit to income before income taxes:
|
|
|
|
|
|
|
|
|
Segment profit
|
|
$
|
53,167
|
|
|
$
|
56,894
|
|
|
$
|
118,114
|
|
|
$
|
116,826
|
|
Stock compensation expense
|
|
|
(13,795
|
)
|
|
|
(9,510
|
)
|
|
|
(27,696
|
)
|
|
|
(18,397
|
)
|
Changes in fair value of contingent consideration
|
|
|
(2,567
|
)
|
|
|
(463
|
)
|
|
|
(17,536
|
)
|
|
|
(197
|
)
|
Impairment of intangible assets
|
|
|
-
|
|
|
|
(4,800
|
)
|
|
|
-
|
|
|
|
(4,800
|
)
|
Non-controlling interest segment profit (loss)
|
|
|
(350
|
)
|
|
|
(1,312
|
)
|
|
|
(444
|
)
|
|
|
(1,147
|
)
|
Depreciation and amortization
|
|
|
(25,022
|
)
|
|
|
(25,580
|
)
|
|
|
(48,518
|
)
|
|
|
(50,587
|
)
|
Interest expense
|
|
|
(1,653
|
)
|
|
|
(1,994
|
)
|
|
|
(3,279
|
)
|
|
|
(3,742
|
)
|
Interest income
|
|
|
500
|
|
|
|
692
|
|
|
|
966
|
|
|
|
1,375
|
|
Income before income taxes
|
|
$
|
10,280
|
|
|
$
|
13,927
|
|
|
$
|
21,607
|
|
|
$
|
39,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 2016 will be filed with the SEC on, or shortly
after, Friday, July 29, 2016.
|
|
(2) Stock compensation expense, changes in the fair value of
contingent consideration recorded in relation to the acquisitions,
and impairment of intangible assets are included in direct service
costs and other operating expenses; however, these amounts are
excluded from the computation of segment profit.
|
|
(3) The non-controlling portion of AlphaCare's segment profit (loss)
is excluded from the computation of segment profit.
|
|
(4) Effective January 1, 2016, the Company implemented changes
related to the allocation of Corporate operational and support
functions. These changes were applied retrospectively.
|
|
(5) Healthcare subcontracts with Pharmacy Management to provide
pharmacy benefits management services for certain of Healthcare's
customers. In addition, Pharmacy Management provides pharmacy
benefits management for the Company's employees covered under its
medical plan. As such, revenue, cost of goods sold and direct
service costs and other related to these arrangements are eliminated.
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160729005143/en/
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