Magellan Health Posts Wider-Than-Estimated 4Q Loss; Street Says Hold


Magellan Health incurred a wider-than-expected 4Q loss, while revenue beat the Street consensus.

The healthcare management services provider posted an adjusted loss of $0.38 per share, versus net earnings of $0.66 per share in the year-ago period. Analysts had expected a loss of $0.25 per share.

Meanwhile, Magellan Health’s (MGLN) revenue increased 4.5% year-over-year to hit $1.185 billion, topping consensus estimates by $50 million. Managed care revenue saw a marginal decline in 4Q, while pharmacy benefit management sales increased by $52.3 million to $605.5 million year-over-year.

In January, Magellan Health agreed to be acquired by Centene Corp. at an enterprise value of $2.2 billion. Subject to regulatory and shareholder approvals, the deal is expected to close in the second half of fiscal 2021.

The company’s CEO Kenneth Fasola said, “Centene Corp. will acquire Magellan Health for $95 per share in cash. I am pleased with the energy and enthusiasm exhibited by both organizations about this transaction. I expect Magellan to continue to have significant opportunities serving third party customers and growing as a payer services business operating independently under Centene’s Health Care Enterprises division.” (See Magellan Health stock analysis on TipRanks)

Jefferies analyst David Styblo in January raised the stock’s price target to $95 (1.8% upside potential) from $92 but lowered the rating to Hold from Buy.

The other analyst covering the stock, Stephens’ Scott Fidel also cut his rating to Hold from Buy following the takeover deal by Centene. The two ratings add up to a Hold consensus rating alongside an average analyst price target of $95. Shares have rallied 58% over the past year.

Magellan scores a 3 out of 10 from TipRanks’ Smart Score rating system, indicating that the stock may underperform the broader market.

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