EX-99.1 2 mgln-20161109ex991a54ea4.htm EX-99.1 mgln_Ex_99_1

 

Exhibit 99.1

Picture 2

NEWS RELEASE

Media Contact: Colleen Flanagan Johnson, cefjohnson@magellanhealth.com, (860) 507-1923

Investor Contact: Renie Shapiro Silver, rshapiro@magellanhealth.com, (877) 645-6464

 

Magellan Health Reports Third Quarter 2016 Financial Results

Raises 2016 Guidance

 

Scottsdale, Ariz. – November 9, 2016 – Magellan Health, Inc. (NASDAQ: MGLN) today reported financial results for the third quarter of 2016, as summarized below. For the quarter ended September 30, 2016, the company reported net revenue of $1.3 billion and net income of $25.5 million, or $1.06 per diluted common share. In addition, the company reported segment profit of $82.8 million, adjusted net income of $33.3 million and adjusted earnings per share (EPS) of $1.39. As of September 30, 2016, the company had unrestricted cash and investments of $233.8 million.

 

Third Quarter Financial Results*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three Months Ended

 

 

 

 

Nine Months Ended

 

 

 

 

 

September 30, 

 

 

 

 

September 30, 

 

 

 

(Millions, except per share results)

 

2016

    

2015

    

Inc/(Dec)

  

  

2016

    

2015

    

Inc/(Dec)

 

Net Revenue

 

$

1,292.1

 

$

1,190.1

 

8.6 

 

$

3,573.5

 

$

3,328.7

 

7.4 

%

Net Income (Loss)

 

 

25.5 

 

 

(7.8)

 

N/A

 

 

 

42.7 

 

 

4.1 

 

941.5 

%

Segment Profit*

 

 

82.8 

 

 

55.3 

 

49.7 

%

 

 

199.6 

 

 

173.4 

 

15.1 

%

Adjusted Net Income*

 

 

33.3 

 

 

18.9 

 

76.2 

%

 

 

67.1 

 

 

58.0 

 

15.7 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Results:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (Loss) per Share

 

 

1.06

 

 

(0.31)

 

N/A

 

 

 

1.75

 

 

0.16

 

993.8 

%

Adjusted Earnings per Share*

 

 

1.39 

 

$

0.76

 

82.9 

%

 

 

2.76

 

 

2.20

 

25.5 

%

 

Variances for the three months ended September 30, 2016 versus September 30, 2015:

·

The increase in net revenue is attributable to new business and same store growth, as well as revenue from the Armed Forces Services Corporation (AFSC) and The Management Group (TMG) acquisitions, partially offset by the loss of revenues associated with terminated contracts.

·

The change in net income between periods is due to the after-tax impact of higher segment profit, and a reduction in contingent consideration expense and stock compensation expense related to acquisitions.

·

The increase in segment profit is primarily due to new business, improved results in our Magellan Complete Care (MCC) business, net same store growth, and the inclusion of AFSC and TMG results in the current quarter, partially offset by the impact of contract terminations. Included in segment profit this quarter is approximately $13 million of net favorable out-of-period items, primarily related to favorable medical claims development in the healthcare segment.

·

The change in adjusted net income between periods was mainly due to the after-tax impact of higher segment profit in the current quarter.  

 

“I am very pleased with this quarter’s results. Over the last several years we’ve built an exceptionally capable senior leadership team, and our results reflect strong execution across all of our business units. We remain focused on delivering strong shareholder value, today and in the future, through both the results we deliver and the positive impact we have on the lives of the individuals we serve,” said Barry M. Smith, chairman and chief executive officer of Magellan Health.

 

Results and Outlook

We had strong results this quarter in both our pharmacy and healthcare segments,” said Jonathan N. Rubin, chief financial officer of Magellan.

 

“We are raising our guidance for full year 2016 to reflect the improved performance of MCC of Florida, favorable claims development and the impact of lower estimated depreciation and amortization expense. We now expect revenue to be in the range of $4.78 to $ 5.02 billion and net income to be $69 to $78 million, which equates to EPS between $2.86 and $3.24 per share. Segment profit is estimated to be in the range of $295 to $305 million. Adjusted net income is expected to be between $101 and $110 million, with adjusted EPS between $4.19 and $4.57. EPS and adjusted EPS are based on average fully diluted shares of 24.1 million. This updated share count reflects share repurchases and option exercises through November 7, 2016, but excludes any potential future activity. In addition, we are revising our


* Refer to the Basis of Presentation for a discussion of non-GAAP financial measures.


 

guidance for cash flow from operations, before the impact of the shift between restricted cash and restricted investments, to a range of $122 to $153 million, mainly due to the increased segment profit projection. 

 

“Looking ahead, as compared to our updated segment profit guidance range for 2016, we currently expect that we will have solid segment profit growth in 2017. Our positive update to 2016 guidance reflects our strong operating performance, as well as successful execution of our growth strategy. This positions us well for next year, and I look forward to further discussing our 2017 guidance and sharing the details for our plan for solid earnings growth during our guidance call later this month.”

 

Earnings Conference Call

Management will host a conference call at 9:00 a.m. Eastern on Wednesday, November 9, 2016. To participate in the conference call, interested parties should call 1-800-857-1812 and reference the pass code Third 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, special charges or benefits, 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, amortization of identified acquisition intangibles, as well as impairment 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, net income, earnings per share, segment profit, adjusted net income, adjusted earnings per share and cash flow from operations, 2017 segment profit, 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

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

2015

  

  

2016 (1)

    

2015

  

  

2016 (1)

 

Net revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Managed care and other

 

$

809,249 

 

 

$

751,589 

 

$

2,334,139 

 

 

$

2,127,911 

 

PBM and dispensing

 

 

380,833 

 

 

 

540,543 

 

 

994,518 

 

 

 

1,445,588 

 

Total net revenue

 

 

1,190,082 

 

 

 

1,292,132 

 

 

3,328,657 

 

 

 

3,573,499 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of care

 

 

596,323

 

 

 

480,243

 

 

1,686,939 

 

 

 

1,410,403 

 

Cost of goods sold

 

 

360,444 

 

 

 

509,673

 

 

940,060 

 

 

 

1,362,062 

 

Direct service costs and other operating expenses (2)(3)(4)

 

 

220,586

 

 

 

229,094

 

 

616,491 

 

 

 

635,627 

 

Depreciation and amortization

 

 

26,721

 

 

 

26,885

 

 

75,239 

 

 

 

77,472 

 

Interest expense

 

 

1,654

 

 

 

3,038

 

 

4,933 

 

 

 

6,780 

 

Interest income

 

 

(631)

 

 

 

(741)

 

 

(1,597)

 

 

 

(2,116)

 

Total costs and expenses

 

 

1,205,097 

 

 

 

1,248,192 

 

 

3,322,065 

 

 

 

3,490,228 

 

(Loss) income before income taxes

 

 

(15,015)

 

 

 

43,940 

 

 

6,592 

 

 

 

83,271 

 

(Benefit) provision for income taxes

 

 

(7,254)

 

 

 

18,631 

 

 

2,866 

 

 

 

43,259 

 

Net (loss) income

 

 

(7,761)

 

 

 

25,309

 

 

3,726 

 

 

 

40,012 

 

Less:  net income (loss) attributable to non-controlling interest

 

 

47

 

 

 

(200)

 

 

(397)

 

 

 

(2,692)

 

Net (loss) income attributable to Magellan Health, Inc

 

$

(7,808)

 

 

$

25,509

 

$

4,123 

 

 

$

42,704 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding — basic .

 

 

24,892 

 

 

 

23,052

 

 

25,297 

 

 

 

23,394 

 

Weighted average number of common shares outstanding — diluted

 

 

24,892 

 

 

 

24,005

 

 

26,372 

 

 

 

24,343 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per common share attributable to Magellan Health, Inc. — basic

 

$

(0.31)

 

 

$

1.11

 

$

0.16 

 

 

$

1.83 

 

Net (loss) income per common share attributable to Magellan Health, Inc. — diluted

 

$

(0.31)

 

 

$

1.06

 

$

0.16 

 

 

$

1.75 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(7,761)

 

 

$

25,309

 

$

3,726 

 

 

$

40,012 

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on available-for-sale securities (5)

 

 

53 

 

 

 

(127)

 

 

29 

 

 

 

109 

 

Comprehensive (loss) income

 

 

(7,708)

 

 

 

25,182

 

 

3,755 

 

 

 

40,121 

 

Less:  comprehensive income (loss) attributable to non-controlling interest

 

 

47 

 

 

 

(200)

 

 

(397)

 

 

 

(2,692)

 

Comprehensive (loss) income attributable to Magellan Health, Inc.

 

$

(7,755)

 

 

$

25,382

 

$

4,152 

 

 

$

42,813 

 


(1)

For a more detailed discussion of Magellan Health's results for the quarterly period ended September 30, 2016, refer to the Company's quarterly report on Form 10-Q, which will be filed with the SEC on, or shortly after, Wednesday, November 9, 2016, and the live broadcast or taped replay of the Company's earnings conference call on Wednesday, November 9, 2016 will be available at MagellanHealth.com.

(2)

Includes stock compensation expense of $12,897 and $9,176 for the three months ended September 30, 2015 and 2016, respectively, and $40,593 and $27,573 for the nine months ended September 30, 2015 and 2016, respectively.

(3)

Includes changes in fair value of contingent consideration of $29,738 and $313 for the three months ended September 30, 2015 and 2016, respectively, and $47,274 and $510 for the nine months ended September 30, 2015 and 2016, respectively.

(4)

Includes impairment of intangible assets of $0 and $4,800 for the three and nine months ended September 30, 2016, respectively.

(5)

Net of income tax provision (benefit) of $27 and $(78) for the three months ended September 30, 2015 and 2016, respectively, and $25 and $68 for the nine months ended September 30, 2015 and 2016, respectively.


 

MAGELLAN HEALTH, INC. AND SUBSIDIARIES

NON-GAAP MEASURES

(Unaudited)

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three Months Ended

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

2015

  

  

2016 (1)

    

2015

  

  

2016 (1)

 

Adjusted net income

 

$

18,898

 

 

$

33,322

 

$

58,004

 

 

$

67,102

 

Adjusted for acquisitions starting in 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock compensation relating to acquisitions

 

 

(8,923)

 

 

 

(5,105)

 

 

(25,759)

 

 

 

(14,217)

 

Changes in fair value of contingent consideration

 

 

(29,738)

 

 

 

(313)

 

 

(47,274)

 

 

 

(510)

 

Amortization of acquired intangibles

 

 

(5,988)

 

 

 

(6,649)

 

 

(15,631)

 

 

 

(17,938)

 

Impairment of intangible assets, net of non-controlling interest

 

 

 —

 

 

 

 —

 

 

 —

 

 

 

(3,936)

 

Tax impact

 

 

17,943

 

 

 

4,254

 

 

34,783

 

 

 

12,203

 

Net (loss) income attributable to Magellan Health, Inc.

 

$

(7,808)

 

 

$

25,509

 

$

4,123

 

 

$

42,704

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EPS

 

$

0.76

 

 

$

1.39

 

$

2.20

 

 

$

2.76

 

Adjusted for acquisitions starting in 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock compensation relating to acquisitions

 

 

(0.36)

 

 

 

(0.22)

 

 

(0.98)

 

 

 

(0.59)

 

Changes in fair value of contingent consideration

 

 

(1.19)

 

 

 

(0.01)

 

 

(1.79)

 

 

 

(0.02)

 

Amortization of acquired intangibles

 

 

(0.24)

 

 

 

(0.28)

 

 

(0.59)

 

 

 

(0.74)

 

Impairment of intangible assets, net of non-controlling interest

 

 

 —

 

 

 

 —

 

 

 —

 

 

 

(0.16)

 

Tax impact

 

 

0.72

 

 

 

0.18

 

 

1.32

 

 

 

0.50

 

Net (loss) income per common share attributable to Magellan Health, Inc.— diluted

 

$

(0.31)

 

 

$

1.06 

 

$

0.16 

 

 

$

1.75 

 


(1)

The Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2016 will be filed with the SEC on, or shortly after, Wednesday, November 9, 2016.

 


 

MAGELLAN HEALTH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

    

2015

  

  

2016 (1)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

3,726

 

 

$

40,012

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

75,239

 

 

 

77,472

 

Non-cash impairment of intangible assets

 

 

 —

 

 

 

4,800

 

Non-cash interest expense

 

 

297

 

 

 

385

 

Non-cash stock compensation expense

 

 

40,593

 

 

 

27,573

 

Non-cash income tax (benefit) provision

 

 

(1,018)

 

 

 

2,998

 

Non-cash amortization on investments

 

 

5,106

 

 

 

4,224

 

Cash flows from changes in assets and liabilities, net of effects from acquisitions of businesses:

 

 

 

 

 

 

 

 

Restricted cash (2)

 

 

79,959

 

 

 

78,958

 

Accounts receivable, net

 

 

(41,428)

 

 

 

(31,926)

 

Pharmaceutical inventory

 

 

(5,277)

 

 

 

(10,425)

 

Other assets

 

 

(48,653)

 

 

 

(72,374)

 

Accounts payable and accrued liabilities

 

 

(46,035)

 

 

 

23,342

 

Medical claims payable and other medical liabilities

 

 

59,819

 

 

 

(18,017)

 

Contingent consideration

 

 

59,223

 

 

 

(50,591)

 

Tax contingencies

 

 

(2,290)

 

 

 

(111)

 

Deferred credits and other long-term liabilities

 

 

(1,110)

 

 

 

(5,393)

 

Other

 

 

(26)

 

 

 

(57)

 

Net cash provided by operating activities

 

 

178,125

 

 

 

70,870

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(54,604)

 

 

 

(44,345)

 

Acquisitions and investments in businesses, net of cash acquired

 

 

(55,818)

 

 

 

(127,504)

 

Purchase of investments

 

 

(391,785)

 

 

 

(365,521)

 

Maturity of investments

 

 

283,619

 

 

 

373,694

 

Net cash used in investing activities

 

 

(218,588)

 

 

 

(163,676)

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of debt

 

 

 —

 

 

 

290,000

 

Payments to acquire treasury stock

 

 

(150,763)

 

 

 

(106,806)

 

Proceeds from exercise of stock options and warrants

 

 

50,074

 

 

 

10,933

 

Payments on long-term debt and capital lease obligations

 

 

(12,665)

 

 

 

(13,569)

 

Payments on contingent consideration

 

 

(8,932)

 

 

 

(40,559)

 

Tax benefit from exercise of stock options and vesting of stock awards

 

 

3,887

 

 

 

528

 

Other

 

 

408

 

 

 

1,274

 

Net cash (used in) provided by financing activities

 

 

(117,991)

 

 

 

141,801

 

Net (decrease) increase in cash and cash equivalents

 

 

(158,454)

 

 

 

48,995

 

Cash and cash equivalents at beginning of period

 

 

255,303

 

 

 

115,432

 

Cash and cash equivalents at end of period

 

$

96,849

 

 

$

164,427

 


(1)

The Company's Quarterly Report on Form 10-Q for the quarterly period September 30, 2016 will be filed with the SEC on, or shortly after, Wednesday, November 9, 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 nine months ended September 30, 2015 and 2016, restricted cash of $93,785 and $(36,823), 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

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

    

2015

  

  

2016 (1)

    

2015

  

  

2016 (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Managed care and other net revenue

 

$

748,297 

 

 

$

690,572 

 

$

2,170,361 

 

 

$

1,947,470 

Cost of care

 

 

596,323 

 

 

 

480,243 

 

 

1,686,944 

 

 

 

1,410,403 

Direct service costs and other

 

 

108,108 

 

 

 

134,587 

 

 

329,617 

 

 

 

367,555 

Stock compensation expense (2)

 

 

(1,902)

 

 

 

(2,267)

 

 

(6,874)

 

 

 

(6,737)

Changes in fair value of contingent consideration (2)

 

 

809 

 

 

 

(313)

 

 

638 

 

 

 

(383)

Impairment of intangible assets (2)

 

 

 

 

 

 

 

 

 

 

(4,800)

Non-controlling interest - segment profit (loss) (3)

 

 

75 

 

 

 

(189)

 

 

(318)

 

 

 

(1,325)

Healthcare segment profit

 

 

44,884 

 

 

 

78,511 

 

 

160,354 

 

 

 

182,757 

Allocated corporate costs (4)

 

 

15,473 

 

 

 

18,405 

 

 

47,211 

 

 

 

51,019 

Healthcare segment profit after corporate allocations

 

 

29,411 

 

 

 

60,106 

 

 

113,143 

 

 

 

131,738 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pharmacy Management 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Managed care and other net revenue

 

 

60,978 

 

 

 

61,106 

 

 

163,828 

 

 

 

180,658 

PBM and dispensing revenue

 

 

409,371 

 

 

 

570,231 

 

 

1,077,088 

 

 

 

1,535,864 

Cost of care

 

 

 

 

 

 

 

(5)

 

 

 

Cost of goods sold

 

 

387,834 

 

 

 

538,113 

 

 

1,019,200 

 

 

 

1,448,699 

Direct service costs and other

 

 

87,611 

 

 

 

61,145 

 

 

208,461 

 

 

 

177,878 

Stock compensation expense (2)

 

 

(9,769)

 

 

 

(5,368)

 

 

(29,513)

 

 

 

(16,338)

Changes in fair value of contingent consideration (2)

 

 

(30,547)

 

 

 

 

 

(47,912)

 

 

 

(127)

Pharmacy Management segment profit

 

 

35,220 

 

 

 

37,447 

 

 

90,685 

 

 

 

106,410 

Allocated corporate costs (4)

 

 

4,273 

 

 

 

5,330 

 

 

12,694 

 

 

 

13,524 

Pharmacy Management segment profit after corporate allocations

 

 

30,947 

 

 

 

32,117 

 

 

77,991 

 

 

 

92,886 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate and Other (including eliminations) (5) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Managed care and other net revenue eliminations

 

 

(26)

 

 

 

(89)

 

 

(50)

 

 

 

(217)

PBM and dispensing revenue eliminations

 

 

(28,538)

 

 

 

(29,688)

 

 

(82,570)

 

 

 

(90,276)

Cost of care eliminations

 

 

 

 

 

 

 

 

 

 

Cost of goods sold eliminations

 

 

(27,390)

 

 

 

(28,440)

 

 

(79,140)

 

 

 

(86,637)

Corporate and eliminations

 

 

24,867 

 

 

 

33,362 

 

 

78,413 

 

 

 

90,194 

Stock compensation expense (2)

 

 

(1,226)

 

 

 

(1,541)

 

 

(4,206)

 

 

 

(4,498)

Non-controlling interest - segment profit (loss) (3)

 

 

(28)

 

 

 

(5)

 

 

(79)

 

 

 

(16)

Corporate and Other (including eliminations)

 

 

(24,787)

 

 

 

(33,153)

 

 

(77,608)

 

 

 

(89,536)

Allocated corporate costs (4)

 

 

(19,746)

 

 

 

(23,735)

 

 

(59,905)

 

 

 

(64,543)

Corporate costs and eliminations after corporate allocations

 

 

(5,041)

 

 

 

(9,418)

 

 

(17,703)

 

 

 

(24,993)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Managed care and other net revenue

 

 

809,249 

 

 

 

751,589 

 

 

2,334,139 

 

 

 

2,127,911 

PBM and dispensing revenue

 

 

380,833 

 

 

 

540,543 

 

 

994,518 

 

 

 

1,445,588 

Cost of care

 

 

596,323 

 

 

 

480,243 

 

 

1,686,939 

 

 

 

1,410,403 

Cost of goods sold

 

 

360,444 

 

 

 

509,673 

 

 

940,060 

 

 

 

1,362,062 

Direct service costs and other

 

 

220,586 

 

 

 

229,094 

 

 

616,491 

 

 

 

635,627 

Stock compensation expense (2)

 

 

(12,897)

 

 

 

(9,176)

 

 

(40,593)

 

 

 

(27,573)

Changes in fair value of contingent consideration (2)

 

 

(29,738)

 

 

 

(313)

 

 

(47,274)

 

 

 

(510)

Impairment of intangible assets (2)

 

 

 

 

 

 

 

 

 

 

(4,800)

Non-controlling interest - segment profit (loss) (3)

 

 

47 

 

 

 

(194)

 

 

(397)

 

 

 

(1,341)

Consolidated segment profit

 

$

55,317 

 

 

$

82,805 

 

$

173,431 

 

 

$

199,631 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of segment profit to (loss) income before income taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment profit

 

$

55,317 

 

 

$

82,805 

 

$

173,431 

 

 

$

199,631 

Stock compensation expense

 

 

(12,897)

 

 

 

(9,176)

 

 

(40,593)

 

 

 

(27,573)

Changes in fair value of contingent consideration

 

 

(29,738)

 

 

 

(313)

 

 

(47,274)

 

 

 

(510)

Impairment of intangible assets

 

 

 

 

 

 

 

 

 

 

(4,800)

Non-controlling interest segment profit (loss)

 

 

47 

 

 

 

(194)

 

 

(397)

 

 

 

(1,341)

Depreciation and amortization

 

 

(26,721)

 

 

 

(26,885)

 

 

(75,239)

 

 

 

(77,472)

Interest expense

 

 

(1,654)

 

 

 

(3,038)

 

 

(4,933)

 

 

 

(6,780)

Interest and other income

 

 

631 

 

 

 

741 

 

 

1,597 

 

 

 

2,116 

(Loss) income before income taxes

 

$

(15,015)

 

 

$

43,940 

 

$

6,592 

 

 

$

83,271 

(1)

The Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2016 will be filed with the SEC on, or shortly after, Wednesday, November 9, 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.