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Category: Magellan Health (MGLN)
Date: 11 May 2021 Stock Price of Magellan Health (MGLN): $94.10 Market Capital of Magellan Health: $2.46 billion We take a look at the 1st quarter earnings report of their 2021 fiscal year of Magellan Health a leader in managing the fastest growing, most complex areas of health, including special populations, complete pharmacy benefits and other specialty areas of healthcare.
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- I am pleased with our first quarter 2021 results, which reflect the progress of the collective efforts of our associates to transform, innovate and grow our businesses. Our pipeline of potential new business opportunities continues to build as customers recognize the growing value of our solutions in the market - Kenneth Fasola, chief executive officer, Magellan Health"
About Magellan Health
Magellan 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 supports innovative ways of accessing better health through technology, while remaining focused on the critical personal relationships that are necessary to achieve a healthy, vibrant life. Magellan's customers include health plans and other managed care organizations, employers, labor unions, various military and governmental agencies and third-party administrators
Overview of Magellan Health's 1st quarter 2021 earnings report
First Quarter 2021 Highlights and Other Recent Developments:
- Net revenue increased 3.5% percent over the first quarter of 2020 to $1.16 billion.
- Net income increased by $29.6 million over the first quarter of 2020 to $28.5 million.
- Segment profit increased 80.6% percent over the first quarter of 2020 to $75.1 million.
- Adjusted net income and adjusted earnings per share were $35.5 million and $1.33 as compared to the prior year period of $6.0 million and $0.25, respectively.
- On March 18, 2021, Magellan announced that it had been selected to, once again, serve as a contractor for the Military and Family Life Counseling program, which provides counseling for adults and children in the military community.
- On March 31, 2021, Magellan’s shareholders adopted the plan of merger with Centene Corporation (“Centene”). The Merger Agreement provides for the acquisition by Centene at a price of $95 per share of Magellan common stock in cash. The Company continues to expect the transaction to close during the second half of 2021.
Magellan Health management commentary on their 1st quarter 2021 earnings
PHOENIX – April 30, 2021 – Magellan Health, Inc. (NASDAQ: MGLN) today announced financial results for the first quarter ended March 31, 2021,
“I am pleased with our first quarter 2021 results, which reflect the progress of the collective efforts of our associates to transform, innovate and grow our businesses. Our pipeline of potential new business opportunities continues to build as customers recognize the growing value of our solutions in the market,” said Kenneth Fasola, chief executive officer, Magellan Health. “We are also making significant progress in our integration planning efforts with Centene, and we remain enthusiastic about the transaction,” continued Fasola. “We look forward to a new chapter of growth and innovation as a payer services business operating independently under Centene’s Health Care Enterprises division.”
“I am pleased with our first quarter 2021 results, which reflect the progress of the collective efforts of our associates to transform, innovate and grow our businesses. Our pipeline of potential new business opportunities continues to build as customers recognize the growing value of our solutions in the market,” said Kenneth Fasola, chief executive officer, Magellan Health. “We are also making significant progress in our integration planning efforts with Centene, and we remain enthusiastic about the transaction,” continued Fasola. “We look forward to a new chapter of growth and innovation as a payer services business operating independently under Centene’s Health Care Enterprises division.”
Segment Profit
Segment profit from continuing operations was $75.1 million for first quarter of 2021, compared to $41.6 million in the first quarter of 2020.
Segment profit from continuing operations was $75.1 million for first quarter of 2021, compared to $41.6 million in the first quarter of 2020.
- Healthcare segment profit was $41.3 million, representing an increase of $5.7 million from 2020. This year-over-year increase was primarily driven by net business growth partially off-set by an increase in corporate allocations.
- Pharmacy Management segment profit was $43.7 million, representing an increase of $22.8 million from 2020. This year-over-year increase was primarily driven by revenue growth across specialty, government and commercial PBM, improved gross margin, proceeds from the settlement of a legal matter, and the exit from Medicare Part D. These gains were partially off-set by an increase in corporate allocations and start-up costs associated with a new contract implementation.
- Corporate segment costs inclusive of eliminations, but excluding stock compensation expense, totaled $9.9 million, as compared to $14.9 million in 2020. This decrease was primarily driven by the reduction of stranded corporate overhead expenses associated with discontinued operations in the prior year quarter
Magellan Health (MGLN) stock price chart over the last 5 years
The image below shows the stock price history of Magellan Health (MGLN) over the last 5 years. And its been a pretty good time for Magellan Health stockholders. Over the last 5 years the stock of Magellan Health (MGLN) increased by 42.2%
The stock of Magellan Health (MGLN) is trading at a lot closer to its 52 week high than it is to its 52 week low which to us is an indication that the short term sentiment and momentum of Magellan Health stock is positive at this point in time.
The stock of Magellan Health (MGLN) is trading at a lot closer to its 52 week high than it is to its 52 week low which to us is an indication that the short term sentiment and momentum of Magellan Health stock is positive at this point in time.
Magellan Health (MGLN) stock valuation
So what do we value Magellan Health stock at after the release of their 1st quarter 2021 earnings report? Based on Magellan Health earnings report our valuation models provides a target price (full value price) for Magellan Health at $78.20 a stock. We therefore believe that the stock of Magellan Health is overvalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $78.20 therefore we believe a good entry point into Magellan Health s stock is at $70.40 or below. We expect the stock of Magellan Health to pull back strongly from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is overvalued at this point in time.
We therefore rate Magellan Health as a sell
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $78.20 therefore we believe a good entry point into Magellan Health s stock is at $70.40 or below. We expect the stock of Magellan Health to pull back strongly from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is overvalued at this point in time.
We therefore rate Magellan Health as a sell
Next earnings release of Magellan Health
It is expected that Magellan Health will publish their 2nd quarter 2021 earnings report in early August 2021