Magellan Health Reports Third-Quarter Earnings Far Above Analysts’ Expectations

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Magellan Health Services Inc. saw its stock leap early Friday as third-quarter earnings beat analysts’ expectations.

Net income for the three-month period ending Sept. 30 was $66.3 million, or $2.36 per diluted share, compared with $31.4 million, or $1.03 per diluted share, during the same period in 2011.

Analysts polled by Thomson Reuters were expecting, on average, 97 cents per share.

“We are pleased with our recent contract award to administer the Military and Family Life Counseling (MFLC) program for the U.S. Department of Defense, which gives us a stronger foothold in the military and federal government space,” said Magellan chairman and CEO René Lerer.

Quarterly revenue for the company was up 16 percent to $798.4 million compared with $686.8 million during the same period in 2011.

The Avon-based specialty insurer specializes in managing behavioral and mental health services, radiology, and specialty pharmaceuticals.

Revenue grew in all segments except Medicaid administration, which declined 30 percent to $40.3 million from $57.7 million. Commercial health plans grew by 31 percent to $176.7 million from $135.4 million. Revenue from public-sector programs, such as the military contracts, grew by 12 percent to $407 million from $362 million.

Radiology-benefits revenue grew 12 percent to $88 million from $78 million. Specialty-pharmaceutical-benefits revenue grew 38 percent to $101.5 million from $73.8 million.

“We are also making important strides with our Medicaid strategy, which features our unique model of care and data analytic capabilities,” Lerer said. “Whether it is expanding our reach into new markets like MFLC (Military and Family Life Counseling), or executing on our Medicaid strategy, Magellan is innovating in order to provide current and potential customers with new solutions.”

Magellan expects net income for the year from $135 million to $155 million, or from $4.83 to $5.55 per diluted share. Analysts expected Magellan to earn $3.72 per share for the year.

Magellan’s stock was up $2.01 to $50.08 Friday morning.

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About Matthew Sturdevant

Full-time staff journalist at The Hartford Courant and magazine freelancer with a master's degree in writing from Dartmouth. My work has appeared in The Los Angeles Times, The Chicago Tribune, Taiwan News, The Baltimore Sun and many other news sources. My blog has been referenced by, the Kaiser Family Foundation, the Georgetown Law Library and a number of organizations in healthcare and business. Sturdevant’s blog is "a well-written wealth of ideas," said The Donald W. Reynolds National Center for Business Journalism, (, May 18, 2011). I have experience writing for newspapers, magazines, Web sites and blogs as well as shooting and editing video. I made regular appearances on news-talk radio and on the NBC affiliate station in Corpus Christi, Texas. I made occasional appearances on the Fox affiliate in Connecticut promoting Hartford Courant articles.

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