It has been about a month since the last earnings report for Magellan Health (MGLN). Shares have added about 19.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Magellan Health due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Magellan Health Q3 Earnings Miss Estimates, Down Y/Y
Magellan Health, Inc.’s earnings per share of $1.23 missed the Zacks Consensus Estimate by 3.15% and declined 15.2% year over year.
Revenues of $1.83 billion were down 1.3% year over year due to reduction in Magellan Complete Care Florida and Medicare Part D footprint and PBM health plan contract loss. This was partly offset by growth in MCC of Virginia and new PBM employer business. Revenues beat the Zacks Consensus Estimate by 2.8%.
Segment profit of $72.2 million was down 18.3% year over year due to a decline in contribution from its Healthcare segment, partly offset by a slight increase in profit from Pharmacy Management segment.
Total cost and expense of $1.8 billion inched up 0.7% year over year due to higher cost of goods sold.
Cash flow from operations for the nine months ended Sep 30, 2019 was $34 million, down 76% year over year.
As of Sep 30, 2019, the company's cash and cash equivalents totaled $376.7 million, up 38% from year-end 2018 level.
For 2019, the company narrowed its earnings per share guidance range to $3.35-$4.00 from the earlier provided expectation of $3.70-4.69. Revenues are estimated between $7 billion and $7.2 billion, segment profit range has been narrowed to $$245-$260 million from $270-$290 million, guided earlier.
Magellan Health Board of Directors Appoints Kenneth J. Fasola as Chief Executive Officer – Oct 31, 2019
The company has appointed Kenneth J. Fasola as chief executive officer, effective Nov14, 2019. Fasola will succeed the current CEO Barry M. Smith, who will help to assist with the transition as needed.
How Have Estimates Been Moving Since Then?
Estimates review followed a downward path over the past two months. The consensus estimate has shifted -40.68% due to these changes.
At this time, Magellan Health has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Magellan Health has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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