Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Document Information [Line Items] | |
Entity Central Index Key | 0000019411 |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Jun. 30, 2019 |
Document Transition Report | false |
Entity File Number | 1-6639 |
Entity Registrant Name | MAGELLAN HEALTH, INC. |
Entity Incorporation, State or Country Code | DE |
Entity Tax Identification Number | 58-1076937 |
Entity Address, Address Line One | 4800 N. Scottsdale Rd |
Entity Address, Address Line Two | Suite 4400 |
Entity Address, City or Town | Scottsdale |
Entity Address, State or Province | AZ |
Entity Address, Postal Zip Code | 85251 |
City Area Code | 602 |
Local Phone Number | 572-6050 |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Listing, Par Value Per Share | $ / shares | $ 0.01 |
Title of 12(b) Security | Common Stock, par value $0.01 per share |
Trading Symbol | MGLN |
Security Exchange Name | NASDAQ |
Entity Common Stock, Shares Outstanding | shares | 24,400,553 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | Q2 |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current Assets: | ||
Cash and cash equivalents ($160,967 and $105,468 restricted at December 31, 2018 and June 30, 2019, respectively) | $ 260,352 | $ 272,308 |
Accounts receivable, net | 810,431 | 756,059 |
Short-term investments ($363,840 and $350,060 restricted at December 31, 2018 and June 30, 2019, respectively) | 371,678 | 382,582 |
Pharmaceutical inventory | 45,611 | 40,818 |
Other current assets ($43,401 and $45,896 restricted at December 31, 2018 and June 30, 2019, respectively) | 96,529 | 95,400 |
Total Current Assets | 1,584,601 | 1,547,167 |
Property and equipment, net | 145,182 | 150,748 |
Long-term investments ($2,854 and $22,841 restricted at December 31, 2018 and June 30, 2019, respectively) | 22,841 | 3,161 |
Deferred income taxes | 3,212 | 3,411 |
Other long-term assets | 107,431 | 24,530 |
Goodwill | 1,018,156 | 1,018,156 |
Other intangible assets, net | 196,368 | 231,883 |
Total Assets | 3,077,791 | 2,979,056 |
Current Liabilities: | ||
Accounts payable | 75,436 | 72,077 |
Accrued liabilities | 260,980 | 231,356 |
Short-term contingent consideration | 119 | 8,000 |
Medical claims payable | 401,289 | 393,547 |
Other medical liabilities | 166,226 | 169,639 |
Current debt, finance lease and deferred financing obligations | 21,077 | 24,274 |
Total Current Liabilities | 925,127 | 898,893 |
Long-term debt, finance lease and deferred financing obligations | 712,650 | 728,608 |
Deferred income taxes | 11,998 | 11,167 |
Tax contingencies | 17,264 | 16,478 |
Long-term contingent consideration | 2,124 | |
Deferred credits and other long-term liabilities | 76,482 | 36,483 |
Total Liabilities | 1,743,521 | 1,693,753 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, par value $.01 per share Authorized-10,000 shares at December 31, 2018 and June 30, 2019-Issued and outstanding-none | ||
Common stock, par value $.01 per share Authorized-100,000 shares at December 31, 2018 and June 30, 2019-Issued and outstanding-53,536 and 23,935 shares at December 31, 2018, respectively, and 54,063 and 24,401 shares at June 30, 2019, respectively | 541 | 535 |
Other Stockholders' Equity: | ||
Additional paid-in capital | 1,364,693 | 1,326,645 |
Retained earnings | 1,433,348 | 1,419,449 |
Accumulated other comprehensive (loss) income | 415 | (324) |
Treasury stock, at cost, 29,601 and 29,662 shares at December 31, 2018 and June 30, 2019, respectively | (1,464,727) | (1,461,002) |
Total Stockholders' Equity | 1,334,270 | 1,285,303 |
Total Liabilities and Stockholders' Equity | $ 3,077,791 | $ 2,979,056 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Restricted cash and cash equivalents | $ 105,468 | $ 160,967 |
Short-term restricted investments (in dollars) | 350,060 | 363,840 |
Other current restricted assets (in dollars) | 45,896 | 43,401 |
Long term restricted investments (in dollars) | $ 22,841 | $ 2,854 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized shares | 10,000 | 10,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares | 100,000 | 100,000 |
Common stock, issued shares | 54,063 | 53,536 |
Common stock, outstanding shares | 24,401 | 23,935 |
Common stock in treasury, shares | 29,662 | 29,601 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Net revenue: | ||||
Net revenue | $ 1,788,336 | $ 1,810,923 | $ 3,527,825 | $ 3,616,000 |
Costs and expenses: | ||||
Cost of care | 1,001,886 | 935,814 | 1,943,847 | 1,864,475 |
Cost of goods sold | 461,187 | 558,419 | 950,980 | 1,118,084 |
Direct service costs and other operating expenses | 266,434 | 259,152 | 538,358 | 528,229 |
Depreciation and amortization | 33,490 | 33,848 | 64,198 | 64,255 |
Interest expense | 9,141 | 8,678 | 18,248 | 17,044 |
Interest and other income | (5,021) | (3,363) | (9,995) | (5,839) |
Total costs and expenses | 1,767,117 | 1,792,548 | 3,505,636 | 3,586,248 |
Income before income taxes | 21,219 | 18,375 | 22,189 | 29,752 |
Provision for income taxes | 7,606 | 4,824 | 8,145 | 4,749 |
Net income | $ 13,613 | $ 13,551 | $ 14,044 | $ 25,003 |
Net income per common share: | ||||
Basic (in dollars per share) | $ 0.56 | $ 0.55 | $ 0.58 | $ 1.02 |
Diluted (in dollars per share) | $ 0.56 | $ 0.53 | $ 0.58 | $ 0.98 |
Other comprehensive income: | ||||
Unrealized gains (losses) on available-for-sale securities | $ 419 | $ 132 | $ 739 | $ (187) |
Comprehensive income | 14,032 | 13,683 | 14,783 | 24,816 |
Managed care and other | ||||
Net revenue: | ||||
Net revenue | 1,283,143 | 1,215,340 | 2,507,122 | 2,435,103 |
PBM | ||||
Net revenue: | ||||
Net revenue | $ 505,193 | $ 595,583 | $ 1,020,703 | $ 1,180,897 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Stock compensation expense | $ 5,414 | $ 10,439 | $ 15,021 | $ 18,085 |
Changes in fair value of contingent consideration | (2,149) | 70 | (2,005) | 303 |
Net of income tax (benefit) expense | $ 131 | $ 42 | $ 231 | $ (59) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Common Stock In Treasury | Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Balance at Dec. 31, 2017 | $ 530 | $ (1,397,962) | $ 1,274,811 | $ 1,399,495 | $ (380) | $ 1,276,494 |
Balance (in shares) at Dec. 31, 2017 | 52,973,000 | (28,771,000) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock compensation expense | 18,085 | 18,085 | ||||
Exercise of stock options | $ 4 | 21,472 | 21,476 | |||
Exercise of stock options (in shares) | 379,000 | |||||
Issuance of equity | $ 1 | (3,052) | (3,051) | |||
Issuance of equity (in shares) | 123,000 | |||||
Repurchase of stock | $ (14,823) | (14,823) | ||||
Repurchase of stock (in shares) | (149,000) | |||||
Net income | 25,003 | 25,003 | ||||
Other comprehensive income (loss)-other | (187) | (187) | ||||
Adoption of new accounting standards | Accounting Standards Update 2014-09 | (4,227) | (4,227) | ||||
Balance at Jun. 30, 2018 | $ 535 | $ (1,412,785) | 1,311,316 | 1,420,271 | (567) | 1,318,770 |
Balance (in shares) at Jun. 30, 2018 | 53,475,000 | (28,920,000) | ||||
Balance at Mar. 31, 2018 | $ 534 | $ (1,397,962) | 1,296,536 | 1,406,720 | (699) | 1,305,129 |
Balance (in shares) at Mar. 31, 2018 | 53,398,000 | (28,771,000) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock compensation expense | 10,439 | 10,439 | ||||
Exercise of stock options | $ 1 | 4,341 | 4,342 | |||
Exercise of stock options (in shares) | 79,000 | |||||
Issuance of equity (in shares) | (2,000) | |||||
Repurchase of stock | $ (14,823) | (14,823) | ||||
Repurchase of stock (in shares) | (149,000) | |||||
Net income | 13,551 | 13,551 | ||||
Other comprehensive income (loss)-other | 132 | 132 | ||||
Balance at Jun. 30, 2018 | $ 535 | $ (1,412,785) | 1,311,316 | 1,420,271 | (567) | 1,318,770 |
Balance (in shares) at Jun. 30, 2018 | 53,475,000 | (28,920,000) | ||||
Balance at Dec. 31, 2018 | $ 535 | $ (1,461,002) | 1,326,645 | 1,419,449 | (324) | 1,285,303 |
Balance (in shares) at Dec. 31, 2018 | 53,536,000 | (29,601,000) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock compensation expense | 15,021 | 15,021 | ||||
Exercise of stock options | $ 5 | 23,474 | $ 23,479 | |||
Exercise of stock options (in shares) | 389,000 | 389,268 | ||||
Issuance of equity | $ 1 | (447) | $ (446) | |||
Issuance of equity (in shares) | 138,000 | |||||
Repurchase of stock | $ (3,725) | (3,725) | ||||
Repurchase of stock (in shares) | (61,000) | |||||
Net income | 14,044 | 14,044 | ||||
Other comprehensive income (loss)-other | 739 | 739 | ||||
Adoption of new accounting standards | Accounting Standards Update 2016-02 | (145) | (145) | ||||
Balance at Jun. 30, 2019 | $ 541 | $ (1,464,727) | 1,364,693 | 1,433,348 | 415 | 1,334,270 |
Balance (in shares) at Jun. 30, 2019 | 54,063,000 | (29,662,000) | ||||
Balance at Mar. 31, 2019 | $ 537 | $ (1,464,727) | 1,337,849 | 1,419,735 | (4) | 1,293,390 |
Balance (in shares) at Mar. 31, 2019 | 53,695,000 | (29,662,000) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock compensation expense | 5,414 | 5,414 | ||||
Exercise of stock options | $ 4 | 21,430 | 21,434 | |||
Exercise of stock options (in shares) | 348,000 | |||||
Issuance of equity (in shares) | 20,000 | |||||
Net income | 13,613 | 13,613 | ||||
Other comprehensive income (loss)-other | 419 | 419 | ||||
Balance at Jun. 30, 2019 | $ 541 | $ (1,464,727) | $ 1,364,693 | $ 1,433,348 | $ 415 | $ 1,334,270 |
Balance (in shares) at Jun. 30, 2019 | 54,063,000 | (29,662,000) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 14,044 | $ 25,003 |
Adjustments to reconcile net income to net cash from operating activities: | ||
Depreciation and amortization | 64,198 | 64,255 |
Non-cash interest expense | 679 | 614 |
Non-cash stock compensation expense | 15,021 | 18,085 |
Non-cash income tax provision (benefit) | 1,026 | (100) |
Non-cash amortization on investments | (327) | 1,171 |
Changes in assets and liabilities, net of effects from acquisitions of businesses: | ||
Accounts receivable, net | (51,544) | (179,350) |
Pharmaceutical inventory | (4,793) | (9,388) |
Other assets | (23,890) | (57,398) |
Accounts payable and accrued liabilities | 20,821 | 50,322 |
Medical claims payable and other medical liabilities | 4,329 | 89,932 |
Contingent consideration | (3,758) | 303 |
Tax contingencies | 610 | 721 |
Deferred credits and other long-term liabilities | (7,429) | 16,884 |
Other | 372 | 69 |
Net cash provided by operating activities | 29,359 | 21,123 |
Cash flows from investing activities: | ||
Capital expenditures | (27,804) | (37,132) |
Acquisitions and investments in businesses, net of cash acquired | (320) | |
Purchases of investments | (295,768) | (334,250) |
Proceeds from maturities and sales of investments | 288,290 | 227,446 |
Net cash used in investing activities | (35,602) | (143,936) |
Cash flows from financing activities: | ||
Payments to acquire treasury stock | (4,124) | (14,323) |
Proceeds from exercise of stock options | 20,647 | 21,476 |
Payments on debt, finance lease and deferred financing obligations | (15,543) | (33,912) |
Payments on contingent consideration | (6,247) | |
Other | (446) | (3,051) |
Net cash used in financing activities | (5,713) | (29,810) |
Net decrease in cash and cash equivalents | (11,956) | (152,623) |
Cash and cash equivalents at beginning of period | 272,308 | 398,732 |
Cash and cash equivalents at end of period | 260,352 | 246,109 |
Non-cash investing activities: | ||
Assets acquired under finance leases and deferred financing | $ 3,302 | $ 4,623 |
General
General | 6 Months Ended |
Jun. 30, 2019 | |
General | NOTE A—General Basis of Presentation The accompanying unaudited consolidated financial statements of Magellan Health, Inc., a Delaware corporation (“Magellan”), include Magellan and its subsidiaries (together with Magellan, the “Company”). The financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the Securities and Exchange Commission’s (the “SEC”) instructions to Form 10-Q. Accordingly, the financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments considered necessary for a fair presentation, have been included. The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the results to be expected for the full year. All significant intercompany accounts and transactions have been eliminated in consolidation. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2018 and the notes thereto, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2019. Business Overview The Company is a leader within the healthcare management business, and is focused on delivering innovative specialty solutions for the fastest growing, most complex areas of health, including special populations, complete pharmacy benefits, and other specialty carve-out areas of healthcare. The Company develops innovative solutions that combine advanced analytics, agile technology and clinical excellence to drive better decision making, positively impact members’ health outcomes and optimize the cost of care for the customers we serve. The Company provides services to health plans and other managed care organizations (“MCOs”), employers, labor unions, various military and governmental agencies and third party administrators (“TPAs”). Magellan operates three segments: Healthcare, Pharmacy Management and Corporate. Healthcare The Healthcare segment “Healthcare” consists of two reporting units – Behavioral & Specialty Health and Magellan Complete Care (“MCC”). The Behavioral & Specialty Health reporting unit’s customers include health plans, accountable care organizations (“ACOs”), employers, the United States military and various federal government agencies for whom Magellan provides carve-out management services for behavioral health, employee assistance plans (“EAP”) and other areas of specialty healthcare including diagnostic imaging, musculoskeletal management, cardiac and physical medicine. These management services can be applied broadly across commercial, Medicaid and Medicare populations, or on a more targeted basis for our health plans and ACO customers. The Behavioral & Specialty Health unit also includes Magellan’s carve-out behavioral health contracts with various state Medicaid agencies. The MCC reporting unit contracts with state Medicaid agencies and the Centers for Medicare and Medicaid Services (“CMS”) to manage care for beneficiaries under various Medicaid and Medicare programs. MCC manages a wide range of services from total medical cost to carve out long-term support services. MCC largely focuses on managing care for special populations including individuals with serious mental illness (“SMI”), dual eligibles, aged, blind and disabled (“ABD”) and other populations with unique and often complex healthcare needs. Magellan’s coordination and management of these healthcare and long-term support services are provided through its comprehensive network of medical and behavioral health professionals, clinics, hospitals, skilled nursing facilities, home care agencies and ancillary service providers. This network of credentialed providers is integrated with clinical and quality improvement programs to improve access to care and enhance the healthcare experience for individuals in need of care, while at the same time making the cost of these services more affordable for our customers. The Company generally does not directly provide or own any provider of treatment services, although it does employ licensed behavioral health counselors to deliver non-medical counseling under certain government contracts. The Company provides its Healthcare management services primarily through: (i) risk- based products, where the Company assumes all or a substantial portion of the responsibility for the cost of providing treatment services in exchange for a fixed PMPM fee, or (ii) administrative services only (“ASO”) products, where the Company provides services such as utilization review, claims administration and/or provider network management, but does not assume full responsibility for the cost of the treatment services, in exchange for an administrative fee and, in some instances, a gain share. Pharmacy Management The Pharmacy Management segment (“Pharmacy Management”) is comprised of products and solutions that provide clinical and financial management of pharmaceuticals paid under both the medical and the pharmacy benefit. Pharmacy Management’s services include: (i) pharmacy benefit management (“PBM”) services, including pharmaceutical dispensing operations; (ii) pharmacy benefit administration (“PBA”) for state Medicaid and other government sponsored programs; (iii) clinical and formulary management programs; (iv) medical pharmacy management programs; and (v) programs for the integrated management of specialty drugs across both the medical and pharmacy benefit that treat complex conditions, regardless of site of service, method of delivery, or benefit reimbursement. These services are available individually, in combination, or in a fully integrated manner. The Company markets its pharmacy management services to health plans, employers, third party administrators, managed care organizations, state governments, Medicare Part D, and other government agencies, exchanges, brokers and consultants. In addition, the Company will continue to upsell its pharmacy products to its existing customers and market its pharmacy solutions to the Healthcare customer base. Pharmacy Management contracts with its customers for services using risk-based, gain share or ASO arrangements. In addition, Pharmacy Management provides services to the Healthcare segment for its MCC business. Corporate This segment of the Company is comprised primarily of amounts not allocated to the Healthcare and Pharmacy Management segments that are largely associated with costs related to being a publicly traded company. Summary of Significant Accounting Policies Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, “Leases” (“ASU 2016-02”). This ASU amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets. The FASB also issued various ASUs which subsequently amended ASU 2016-02. These amendments and ASU 2016-02, collectively known as Accounting Standard Codification 842 (“ASC 842”), are effective for annual and interim reporting periods of public entities beginning after December 15, 2018. The Company adopted ASC 842 on a modified retrospective basis on January 1, 2019. The Company applied the transition method which does not require adjustments to comparative periods nor requires modified disclosures in those comparative periods. In addition, the Company elected the package of practical expedients, the practical expedient which permits combining lease and non-lease components (which was applicable to our real estate leases) and the short-term lease practical expedient. The Company implemented new leasing software capable of producing the data to prepare the required accounting and disclosures prescribed by ASC 842. Adoption of ASC 842 resulted in the recognition of right-of-use (“ROU”) assets and lease liabilities of $59.8 million and $67.9 million, respectively as of January 1, 2019. The adoption of ASC 842 did not have a material impact on the Company’s consolidated results of operations or cash flows. The cumulative effect of the change to our consolidated January 1, 2019 balance sheet for the adoption of ASC 842 was as follows (in thousands): Balance at December 31, 2018 Adjustments Due to ASC 842 Balance at January 1, 2019 Assets Deferred income taxes $ 3,411 $ 52 $ 3,463 Other long-term assets 24,530 59,820 84,350 Total Assets 2,979,056 59,872 3,038,928 Liabilities and Stockholders' Equity Accrued liabilities 231,356 13,018 244,374 Total Current Liabilities 898,893 13,018 911,911 Deferred credits and other long-term liabilities 36,483 46,999 83,482 Total Liabilities 1,693,753 60,017 1,753,770 Retained earnings 1,419,449 (145) 1,419,304 Total Stockholders' Equity 1,285,303 (145) 1,285,158 Total Liabilities and Stockholders' Equity 2,979,056 59,872 3,038,928 The impact of the adoption of ASC 842 on our consolidated balance sheet as of June 30, 2019 was as follows (in thousands): As Reported Adjustments Balance Without ASC 842 Adoption Assets Other long-term assets $ 107,431 $ (52,862) $ 54,569 Total Assets 3,077,791 (52,862) 3,024,929 Liabilities and Stockholders' Equity Accrued liabilities 260,980 (11,700) 249,280 Total Current Liabilities 925,127 (11,700) 913,427 Deferred credits and other long-term liabilities 76,482 (41,398) 35,084 Total Liabilities 1,743,521 (53,098) 1,690,423 Retained earnings 1,433,348 236 1,433,584 Total Stockholders' Equity 1,334,270 236 1,334,506 Total Liabilities and Stockholders' Equity 3,077,791 (52,862) 3,024,929 In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). This ASU amends the accounting on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. This guidance is effective for annual and interim periods of public entities beginning after December 15, 2019, with early adoption permitted for fiscal years beginning after December 31, 2018. The Company is currently assessing the potential impact this ASU will have on the Company’s consolidated results of operation, financial position and cash flows. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). The amendments in this ASU eliminate the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. This guidance is effective for annual and interim periods of public entities beginning after December 15, 2019, with early adoption permitted. The Company is currently assessing the potential impact this ASU will have on the Company’s consolidated results of operations, financial position and cash flows. In August 2018, the FASB issued ASU No. 2018-15, “Intangibles-Goodwill and Other–Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”). This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance is effective for annual and interim periods of public entities beginning after December 15, 2019, with early adoption permitted. The Company is currently assessing the potential impact this ASU will have on the Company’s consolidated results of operations, financial position and cash flows. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates of the Company can include, among other things, valuation of goodwill and intangible assets, medical claims payable, other medical liabilities, stock compensation assumptions, tax contingencies and legal liabilities. In addition, the Company also makes estimates in relation to revenue recognition under ASC 606 which are explained in more detail in “ Revenue Recognition Revenue Recognition Virtually all of the Company’s revenues are derived from business in North America. The following tables disaggregate our revenue for the three and six months ended June 30, 2019 by major service line, type of customer and timing of revenue recognition (in thousands): Three Months Ended June 30, 2019 Healthcare Pharmacy Management Elimination Total Major Service Lines Behavioral & Specialty Health Risk-based, non-EAP $ 400,591 $ — $ (65) $ 400,526 EAP risk-based 87,296 — — 87,296 ASO 57,995 10,327 (82) 68,240 Magellan Complete Care Risk-based, non-EAP 659,362 — — 659,362 ASO 15,398 — — 15,398 PBM, including dispensing — 480,167 (44,817) 435,350 Medicare Part D — 69,843 — 69,843 PBA — 33,476 — 33,476 Formulary management — 18,426 — 18,426 Other — 419 — 419 Total net revenue $ 1,220,642 $ 612,658 $ (44,964) $ 1,788,336 Type of Customer Government $ 910,543 $ 173,804 $ — $ 1,084,347 Non-government 310,099 438,854 (44,964) 703,989 Total net revenue $ 1,220,642 $ 612,658 $ (44,964) $ 1,788,336 Timing of Revenue Recognition Transferred at a point in time $ — $ 550,010 $ (44,817) $ 505,193 Transferred over time 1,220,642 62,648 (147) 1,283,143 Total net revenue $ 1,220,642 $ 612,658 $ (44,964) $ 1,788,336 Six Months Ended June 30, 2019 Healthcare Pharmacy Management Elimination Total Major Service Lines Behavioral & Specialty Health Risk-based, non-EAP $ 762,399 $ — $ (143) $ 762,256 EAP risk-based 176,913 — — 176,913 ASO 113,198 18,470 (173) 131,495 Magellan Complete Care Risk-based, non-EAP 1,301,933 — — 1,301,933 ASO 30,452 — — 30,452 PBM, including dispensing — 973,392 (85,872) 887,520 Medicare Part D — 133,183 — 133,183 PBA — 67,453 — 67,453 Formulary management — 35,609 — 35,609 Other — 1,011 — 1,011 Total net revenue $ 2,384,895 $ 1,229,118 $ (86,188) $ 3,527,825 Type of Customer Government $ 1,799,036 $ 401,852 $ — $ 2,200,888 Non-government 585,859 827,266 (86,188) 1,326,937 Total net revenue $ 2,384,895 $ 1,229,118 $ (86,188) $ 3,527,825 Timing of Revenue Recognition Transferred at a point in time $ — $ 1,106,575 $ (85,872) $ 1,020,703 Transferred over time 2,384,895 122,543 (316) 2,507,122 Total net revenue $ 2,384,895 $ 1,229,118 $ (86,188) $ 3,527,825 Per Member Per Month (“PMPM”) Revenue. Under certain government contracts, our risk scores are compared with the overall average risk scores for the relevant state and market pool. Generally, if our risk score is below the average risk score we are required to make a risk adjustment payment into the risk pool, and if our risk score is above the average risk score we will receive a risk adjustment payment from the risk pool. Risk adjustments can have a positive or negative retroactive impact to rates. Pharmacy Benefit Management Revenue. The Company’s customers for PBM business, including pharmaceutical dispensing operations, are generally comprised of MCOs, employer groups and health plans. PBM relationships generally have an expected term of one year or longer. A master services arrangement (“MSA”) is executed by the Company and the customer, which outlines the terms and conditions of the PBM services to be provided. When a member in the customer’s organization submits a prescription, a claim is created which is presented for approval. The acceptance of each individual claim creates enforceable rights and obligations for each party and represents a separate contract. For each individual claim, the performance obligations are limited to the processing and adjudication of the claim, or dispensing of the products purchased. Generally, the transaction price for PBM services is explicitly listed in each contract and does not represent variable consideration. The Company recognizes PBM revenue, which consists of a negotiated prescription price (ingredient cost plus dispensing fee), co-payments and any associated administrative fees, when claims are adjudicated or the drugs are shipped. The Company recognizes PBM revenue on a gross basis (i.e. including drug costs and co-payments) as it is acting as the principal in the arrangement, controls the underlying service, and is contractually obligated to its clients and network pharmacies, which is a primary indicator of gross reporting. In addition, the Company is solely responsible for the claims adjudication process, negotiating the prescription price for the pharmacy, collection of payments from the client for drugs dispensed by the pharmacy, and managing the total prescription drug relationship with the client’s members. If the Company enters into a contract where it is only an administrator, and does not assume any of the risks previously noted, revenue will be recognized on a net basis. For dispensing, at the time of shipment, the earnings process is complete; the obligation of the Company’s customer to pay for the specialty pharmaceutical drugs is fixed, and, due to the nature of the product, the member may neither return the specialty pharmaceutical drugs nor receive a refund. Medicare Part D. The Company is contracted with CMS as a Prescription Drug Plan (“PDP”) to provide prescription drug benefits to Medicare beneficiaries. The accounting for Medicare Part D revenue is primarily the same as that for PBM, as previously discussed. However, there is certain variable consideration present only in Medicare Part D arrangements. The Company estimates the annual amount of variable consideration using a most likely amount methodology, which is allocated to each reporting period based upon actual utilization as a percentage of estimated utilization for the year. Amounts estimated throughout the year for interim reporting are substantially resolved and fixed as of December 31 st , the end of the plan year. Pharmacy Benefit Administration Revenue. Formulary Management Revenue. The Company administers formulary management programs for certain clients through which the Company coordinates the achievement, calculation and collection of rebates and administrative fees from pharmaceutical manufacturers on behalf of clients. Formulary management contracts generally have a term of one year or longer. All formulary management contracts have a single performance obligation that constitutes a series for the provision of rebate services for a drug, with utilization measured and settled on a quarterly basis, for the duration of the arrangement. The Company retains its administrative fee and/or a percentage of rebates that is included in its contract with the client from collecting the rebate from the manufacturer. While the administrative fee and/or the percentage of rebates retained is fixed, there is an unknown quantity of pharmaceutical purchases (utilization) during each quarter, therefore, the transaction price itself is variable. The Company uses the expected value methodology to estimate the total rebates earned each quarter based on estimated volumes of pharmaceutical purchases by the Company’s clients during the quarter, as well as historical and/or anticipated retained rebate percentages. The Company does not record as rebate revenue any rebates that are passed through to its clients. In relation to the Company’s PBM business, the Company administers rebate programs through which it receives rebates from pharmaceutical manufacturers that are shared with its customers. The Company recognizes rebates when the Company is entitled to them and when the amounts of the rebates are determinable. The amount recorded for rebates earned by the Company from the pharmaceutical manufacturers is recorded as a reduction of cost of goods sold. Government EAP Risk-Based Revenue. The Company has certain contracts with federal customers for the provision of various managed care services, which are classified as EAP risk-based business. These contracts are generally multi-year arrangements. The Company’s federal contracts are reimbursed on either a fixed fee basis or a cost reimbursement basis. The performance obligation on a fixed fee contract is to stand ready to provide the staffing required for the contracted period. For fixed fee contracts, the Company believes the invoiced amount corresponds directly with the value to the customer of the Company’s performance completed to date, therefore, the Company is utilizing the “right to invoice” practical expedient, with revenue recognition in the amount for which the Company has the right to invoice. The performance obligation on a cost reimbursement contract is to stand ready to provide the activity or services purchased by the customer, such as the operation of a counseling services group or call center. The performance obligation represents a series for the duration of the arrangement. The reimbursement rate is fixed per the contract; however, the level of activity (e.g., number of hours, number of counselors or number of units) is variable. A majority of the Company’s cost reimbursement transaction price relates specifically to its efforts to transfer the service for a distinct increment of the series (e.g. day or month) and is recognized as revenue when the portion of the series for which it relates has been provided (i.e. as the Company provides hours, counselors or units of service). In accordance with ASC 606-10-50-13, the Company is required to include disclosure on its remaining performance obligations as of the end of the current reporting period. Due to the nature of the contracts in the Company’s PBM and Part D business, these reporting requirements are not applicable. The majority of the Company’s remaining contracts meet certain exemptions as defined in ASC 606-10-50-14 through 606-10-50-14A, including (i) performance obligation is part of a contract that has an original expected duration of one year or less; (ii) the right to invoice practical expedient; and (iii) variable consideration related to unsatisfied performance obligations that is allocated entirely to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation, and the terms of that variable consideration relate specifically to our efforts to transfer the distinct service, or to a specific outcome from transferring the distinct service. For the Company’s contracts that pertain to these exemptions: (i) the remaining performance obligations primarily relate to the provision of managed healthcare services to the customers’ membership; (ii) the estimated remaining duration of these performance obligations ranges from the remainder of the current calendar year to three years; and (iii) variable consideration for these contracts primarily includes net PMPM fees associated with unspecified membership that fluctuates throughout the contract. Accounts Receivable, Contract Assets and Contract Liabilities Accounts receivable, contract assets and contract liabilities consisted of the following (in thousands, except percentages): December 31, June 30, 2018 2019 $ Change % Change Accounts receivable $ 786,395 $ 854,715 $ 68,320 8.7% Contract assets 4,647 12,891 8,244 177.4% Contract liabilities - current 16,853 7,809 (9,044) (53.7%) Contract liabilities - long-term 13,441 12,187 (1,254) (9.3%) Accounts receivable, which are included in accounts receivable, other current assets and other long-term assets on the consolidated balance sheets, increased by $68.3 million, mainly due to timing of receipts. Contract assets, which are included in other current assets on the consolidated balance sheets, increased by $8.2 million, mainly due to the timing of accrual of certain performance incentives. Contract liabilities – current, which are included in accrued liabilities on the consolidated balance sheets, decreased by $9.0 million, mainly due to the timing of receipts related to January 2019 revenues. Contract liabilities – long-term, which are included in deferred credits and other long-term liabilities on the consolidated balance sheets, decreased by $1.3 million, mainly due to certain balances which became current. During the three months ended June 30, 2019, the Company recognized revenue of $2.6 million that was included in current contract liabilities at March 31, 2019. During the six months ended June 30, 2019, the Company recognized revenue of $14.2 million that was included in current contract liabilities at December 31, 2018. The estimated timing of recognition of amounts included in contract liabilities at June 30, 2019 are as follows: 2019—$5.9 million; 2020—$3.6 million; 2021—$3.0 million; 2022 and beyond—$7.5 million. During the three and six months ended June 30, 2019, the revenue the Company recognized related to performance obligations that were satisfied, or partially satisfied, in previous periods were not material. The Company’s accounts receivable consists of amounts due from customers throughout the United States. Collateral is generally not required. A majority of the Company’s contracts have payment terms in the month of service, or within a few months thereafter. The timing of payments from customers from time to time generate contract assets or contract liabilities; however, these amounts are immaterial. Significant Customers Customers exceeding ten percent of the consolidated Company’s net revenues The Company has contracts with the Commonwealth of Virginia (the “Virginia Contracts”). The Company began providing Medicaid managed long-term services and supports to enrollees in the Commonwealth Coordinated Care Plus (“CCC Plus”) program on August 1, 2017. The CCC Plus contract expires annually on December 31, and automatically renews annually on January 1 for a period of five calendar years, with potential of up to five 12-month extensions. The Commonwealth of Virginia has the right to terminate the CCC Plus contract with cause at any time and for convenience upon 90 days ’ notice. On August 1, 2018, the Company began providing integrated healthcare services to Medicaid enrollees in the Commonwealth of Virginia under the Medallion 4.0/FAMIS Managed Care Program (“Medallion”). The initial term of the Medallion contract is from August 1, 2018 through June 30, 2019, with six 12-month renewal options. The Medallion contract has been renewed through June 30, 2020. The Commonwealth of Virginia has the right to terminate the Medallion contract with cause at any time and for convenience upon 180 days ’ notice. The Virginia Contracts generated net revenues of $228.8 million and $391.2 million for the six months ended June 30, 2018 and 2019, respectively. The Company had a contract with the State of New York (the “New York Contract”) to provide integrated managed care services to Medicaid and Medicare enrollees in the State of New York. The Company’s New York Contract terminated on December 31, 2016; however, the Company, along with other participating managed care plans in the state, continues to provide services while a new contract is being finalized. The Company began recognizing revenue in relation to the New York Contract on January 1, 2014 as a result of the acquisition of AlphaCare Holdings, Inc. The Company’s revenues under the New York Contracts increased starting on November 1, 2017 as a result of the acquisition of SWH Holdings, Inc. The New York Contracts generated net revenues of $356.6 million and $400.6 million for the six months ended June 30, 2018 and 2019, respectively. The Company has contracts with the Commonwealth of Massachusetts (the “Massachusetts Contracts”) to provide integrated managed care services to Medicaid and Medicare enrollees in the Commonwealth of Massachusetts. Medicaid services are provided under a Senior Care Options contract (“SCO Contract”) which began on January 1, 2016 and extends through December 31, 2020, with the potential for up to five additional one year extensions. The Commonwealth of Massachusetts may terminate the contract with cause without prior notice and upon 180 days ’ notice without cause. Medicare services are provided under a one-year contract with the Center for Medicare and Medicaid Services (“CMS”). The CMS contract currently extends through December 31, 2019. The Company began recognizing revenue in relation to the Massachusetts Contracts on November 1, 2017 as a result of the acquisition of SWH Holdings, Inc. The Massachusetts Contracts generated net revenues of $330.9 million and $360.9 million for the six months ended June 30, 2018 and 2019, respectively. Customers exceeding ten percent of segment net revenues In addition to the Massachusetts Contract, New York Contract and Virginia Contract previously discussed, the following customers generated in excess of ten percent of net revenues for the respective segment for the six months ended June 30, 2018 and 2019 (in thousands): Segment Term Date 2018 2019 Healthcare Customer A December 31, 2023 $ 307,902 $ 118,061 * Pharmacy Management Customer B March 31, 2021 176,650 174,535 * Revenue amount did not exceed 10 percent of net revenues for the respective segment for the year presented. Amount is shown for comparative purposes only. Concentration of Business The Company also has a significant concentration of business with various counties in the State of Pennsylvania (the “Pennsylvania Counties”) which are part of the Pennsylvania Medicaid program, with members under its contract with CMS and with various agencies and departments of the United States federal government. Net revenues from the Pennsylvania Counties in the aggregate totaled $275.3 million and $271.4 million for the six months ended June 30, 2018 and 2019, respectively. Net revenues from members in relation to its contracts with CMS in aggregate totaled $205.1 million and $133.2 million for the six months ended June 30, 2018 and 2019, respectively. As of December 31, 2018 and June 30, 2019, the Company had $131.0 million and $131.7 million, respectively, in net receivables associated with Medicare Part D from CMS and other parties related to this business. Net revenues from contracts with various agencies and departments of the United States federal government in aggregate totaled $165.8 million and $156.7 million for the six months ended June 30, 2018 and 2019, respectively. The Company’s contracts with customers typically have stated terms of one to three years, and in certain cases contain renewal provisions (at the customer’s option) for successive terms of between one and two years (unless terminated earlier). Substantially all of these contracts may be immediately terminated with cause and many of the Company’s contracts are terminable without cause by the customer or the Company either upon the giving of requisite notice and the passage of a specified period of time (typically between 30 and 180 days) or upon the occurrence of other specified even |
Net Income per Common Share Att
Net Income per Common Share Attributable to Magellan Health, Inc. | 6 Months Ended |
Jun. 30, 2019 | |
Net Income per Common Share Attributable to Magellan Health, Inc. | NOTE B—Net Income per Common Share Attributable to Magellan Health, Inc. The following table reconciles income attributable to common shareholders (numerator) and shares (denominator) used in the computations of net income per share attributable to common shareholders (in thousands, except per share data) for the three and six months ended June 30: Three Months Ended Six Months Ended June 30, June 30, 2018 2019 2018 2019 Numerator: Net income $ 13,551 $ 13,613 $ 25,003 $ 14,044 Denominator: Weighted average number of common shares outstanding—basic 24,569 24,101 24,460 24,024 Common stock equivalents—stock options 669 153 738 132 Common stock equivalents—RSAs 33 7 28 7 Common stock equivalents—RSUs 23 18 50 19 Common stock equivalents—PSUs 111 130 232 127 Common stock equivalents—employee stock purchase plan 2 7 2 6 Weighted average number of common shares outstanding—diluted 25,407 24,416 25,510 24,315 Net income per common share—basic $ 0.55 $ 0.56 $ 1.02 $ 0.58 Net income per common share—diluted $ 0.53 $ 0.56 $ 0.98 $ 0.58 The weighted average number of common shares outstanding for the three and six months ended June 30, 2018 and 2019 were calculated using outstanding shares of the Company’s common stock. Common stock equivalents included in the calculation of diluted weighted average common shares outstanding for the three and six months ended June 30, 2018 and 2019 represent stock options to purchase shares of the Company’s common stock, RSAs, RSUs, PSUs and stock purchased under the Employee Stock Purchase Plan. The Company had additional potential dilutive securities outstanding representing 0.5 million and 0.3 million options for the three and six months ended June 30, 2018, respectively, and 1.1 million and 1.1 million options for the three and six months ended June 30, 2019, respectively, that were not included in the computation of dilutive securities because they were anti-dilutive for the period. Had these shares not been anti-dilutive, all of these shares would not have been included in the net income attributable to common shareholder per common share calculation as the Company uses the treasury stock method of calculating diluted shares. |
Business Segment Information
Business Segment Information | 6 Months Ended |
Jun. 30, 2019 | |
Business Segment Information | NOTE C—Business Segment Information The accounting policies of the Company’s segments are the same as those described in Note A—“General.” The Company evaluates performance of its segments based on profit or loss from operations before stock compensation expense, depreciation and amortization, interest expense, interest and other income, changes in the fair value of contingent consideration recorded in relation to acquisitions, gain on sale of assets, special charges or benefits, and income taxes (“Segment Profit”). Management uses Segment Profit information for internal reporting and control purposes and considers it important in making decisions regarding the allocation of capital and other resources, risk assessment and employee compensation, among other matters. 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. The Company’s segments are defined in Note A—“General.” The following tables summarize, for the periods indicated, operating results by business segment (in thousands): Corporate Pharmacy and Healthcare Management Elimination Consolidated Three Months Ended June 30, 2018 Managed care and other revenue $ 1,154,888 $ 60,603 $ (151) $ 1,215,340 PBM revenue — 642,794 (47,211) 595,583 Cost of care (935,814) — — (935,814) Cost of goods sold — (603,951) 45,532 (558,419) Direct service costs and other (177,990) (70,941) (10,221) (259,152) Stock compensation expense (1) 2,742 1,408 6,289 10,439 Changes in fair value of contingent consideration (1) 70 — — 70 Segment Profit (Loss) $ 43,896 $ 29,913 $ (5,762) $ 68,047 Corporate Pharmacy and Healthcare Management Elimination Consolidated Three Months Ended June 30, 2019 Managed care and other revenue $ 1,220,642 $ 62,648 $ (147) $ 1,283,143 PBM revenue — 550,010 (44,817) 505,193 Cost of care (1,001,886) — — (1,001,886) Cost of goods sold — (505,203) 44,016 (461,187) Direct service costs and other (177,948) (78,776) (9,710) (266,434) Stock compensation expense (1) 2,444 2,124 846 5,414 Changes in fair value of contingent consideration (1) (2,149) — — (2,149) Segment Profit (Loss) $ 41,103 $ 30,803 $ (9,812) $ 62,094 Corporate Pharmacy and Healthcare Management Elimination Consolidated Six Months Ended June 30, 2018 Managed care and other revenue $ 2,312,489 $ 122,910 $ (296) $ 2,435,103 PBM revenue — 1,274,992 (94,095) 1,180,897 Cost of care (1,864,475) — — (1,864,475) Cost of goods sold — (1,208,864) 90,780 (1,118,084) Direct service costs and other (364,236) (146,527) (17,466) (528,229) Stock compensation expense (1) 5,692 2,893 9,500 18,085 Changes in fair value of contingent consideration (1) 303 — — 303 Segment Profit (Loss) $ 89,773 $ 45,404 $ (11,577) $ 123,600 Corporate Pharmacy and Healthcare Management Elimination Consolidated Six Months Ended June 30, 2019 Managed care and other revenue $ 2,384,895 $ 122,543 $ (316) $ 2,507,122 PBM revenue — 1,106,575 (85,872) 1,020,703 Cost of care (1,943,847) — — (1,943,847) Cost of goods sold — (1,035,410) 84,430 (950,980) Direct service costs and other (357,138) (158,411) (22,809) (538,358) Stock compensation expense (1) 4,194 3,796 7,031 15,021 Changes in fair value of contingent consideration (1) (2,005) — — (2,005) Segment Profit (Loss) $ 86,099 $ 39,093 $ (17,536) $ 107,656 (1) Stock compensation expense, changes in the fair value of contingent consideration recorded in relation to 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. The following table reconciles income before income taxes to Segment Profit (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2018 2019 2018 2019 Income before income taxes $ 18,375 $ 21,219 $ 29,752 $ 22,189 Stock compensation expense 10,439 5,414 18,085 15,021 Changes in fair value of contingent consideration 70 (2,149) 303 (2,005) Depreciation and amortization 33,848 33,490 64,255 64,198 Interest expense 8,678 9,141 17,044 18,248 Interest and other income (3,363) (5,021) (5,839) (9,995) Segment Profit $ 68,047 $ 62,094 $ 123,600 $ 107,656 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies | NOTE D—Commitments and Contingencies Legal The Company’s operating activities entail significant risks of liability. From time to time, the Company is subject to various actions and claims arising from the acts or omissions of its employees, network providers or other parties. In the normal course of business, the Company receives reports relating to deaths and other serious incidents involving patients whose care is being managed by the Company. Such incidents occasionally give rise to malpractice, professional negligence and other related actions and claims against the Company or its network providers. Many of these actions and claims received by the Company seek substantial damages and, therefore, require the Company to incur significant fees and costs related to their defense. The Company is also subject to or party to certain class actions and other litigation and claims relating to its operations or business practices. The Company has recorded reserves that, in the opinion of management, are adequate to cover litigation, claims or assessments that have been or may be asserted against the Company, and for which the outcome is probable and reasonably estimable. Management believes that the resolution of such litigation and claims will not have a material adverse effect on the Company’s financial condition or results of operations; however, there can be no assurance in this regard. A Pharmacy Management segment network provider and the Company are currently in dispute regarding pricing and associated calculations pertaining to network reconciliations for a multi-year period. Depending upon the resolution of the dispute, the Company could incur liability to this provider. The unrecorded, potential loss related to these network reconciliations is estimated to range from $0 to $20 million. The ultimate resolution of this matter, if unfavorable, could be material to the Company’s results of operations. Regulatory Issues The managed healthcare industry is subject to numerous laws and regulations. The subjects of such laws and regulations cover, but are not limited to, matters such as licensure, accreditation, government healthcare program participation requirements, information privacy and security, reimbursement for patient services, and Medicare and Medicaid fraud and abuse. Over the past several years, government activity has increased with respect to investigations and/or allegations concerning possible violations of fraud and abuse and false claims statutes and/or regulations by healthcare organizations and insurers. Entities that are found to have violated these laws and regulations may be excluded from participating in government healthcare programs, subjected to fines or penalties or required to repay amounts received from the government for previously billed patient services. Compliance with such laws and regulations can be subject to future government review and interpretation, as well as regulatory actions unknown or unasserted at this time. In addition, regulators of certain of the Company’s subsidiaries may exercise certain discretionary rights under regulations including increasing their supervision of such entities, requiring additional restricted cash or other security or seizing or otherwise taking control of the assets and operations of such subsidiaries. The Company is subject to certain federal laws and regulations in connection with its contracts with the federal government. These laws and regulations affect how the Company conducts business with its federal agency customers and may impose added costs on its business. The Company’s failure to comply with federal procurement laws and regulations could cause it to lose business, incur additional costs and subject it to a variety of civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, harm to reputation, suspension of payments, fines, and suspension or debarment from doing business with federal government agencies. The Company’s wholly owned subsidiary, AFSC, conducts business with federal agency customers and federal contractors to such agencies. The Company is investigating, with the assistance of outside counsel, matters relating to compliance by AFSC with Small Business Administration ( “SBA”) regulations and other federal laws applicable to government contractors and has reported findings to the SBA and the Department of Defense, including facts indicating violations of SBA regulations and other federal laws, such as the Anti-Kickback Act, by former AFSC executives, none of which was disclosed to Magellan prior to its acquisition of AFSC. The Company is voluntarily responding to government requests for further information regarding the Company’s investigation. Contingencies, if any, arising from the results of this investigation and self-reporting could require us to record balance sheet liabilities or accrue expenses, the amount of which we are not able to currently estimate. While the Company believes that it has responded appropriately by self-reporting findings regarding matters that incepted prior to its acquisition of AFSC in order to mitigate the risk of adverse consequences, should the SBA, Department of Defense and/or other federal agencies seek to hold the Company or AFSC responsible for the reported conduct, we may be required to pay damages and/or penalties and AFSC could be suspended or debarred from government contracting. AFSC generated approximately 2% of the Company’s total revenue for the year ended December 31, 2018 and six months ended June 30, 2019. Stock Repurchases On October 26, 2015, the Company’s board of directors approved a stock repurchase plan which authorized the Company to purchase up to $200 million of its outstanding common stock through October 26, 2017 (the “2015 Repurchase Program”). On July 26, 2017, the Company’s board of directors approved an extension of the 2015 Repurchase Program through October 26, 2018. On May 24, 2018, the Company’s board of directors approved an increase of $200 million to the current $200 million stock repurchase plan which will now authorize the Company to purchase up to $400 million of its outstanding common stock under the 2015 Repurchase Program. As of June 30, 2019, the remaining capacity under the 2015 Repurchase Program was $186.3 million. The board also extended the program from October 22, 2018 to October 22, 2020. Stock repurchases under the programs may be carried out from time to time in open market transactions (including blocks) or in privately negotiated transactions. The timing of repurchases and the actual amount purchased will depend on a variety of factors including the market price of the Company’s shares, general market and economic conditions, and other corporate considerations. Repurchases may be made pursuant to plans intended to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, which could allow the Company to purchase its shares during periods when it otherwise might be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods. Repurchases are expected to be funded from working capital and anticipated cash from operations. The repurchase authorization does not require the purchase of a specific number of shares and is subject to suspension or termination by the Company’s board of directors at any time. Pursuant to the 2015 Stock Repurchase Program, the Company made purchases as follows (aggregate cost excludes broker commissions and is reflected in millions): Total Number Average of Shares Price Paid Aggregate Period Purchased per Share Cost October 26, 2015 - December 31, 2015 345,044 $ 53.46 $ 18.4 January 1, 2016 - December 31, 2016 1,828,183 58.40 106.8 January 1, 2017 - December 31, 2017 280,140 77.67 21.8 January 1, 2018 - December 31, 2018 844,872 74.59 63.0 January 1, 2019 - June 30, 2019 60,901 61.15 3.7 3,359,140 $ 213.7 The Company made no share repurchases from July 1, 2019 through July 26, 2019. |
General (Policies)
General (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, “Leases” (“ASU 2016-02”). This ASU amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets. The FASB also issued various ASUs which subsequently amended ASU 2016-02. These amendments and ASU 2016-02, collectively known as Accounting Standard Codification 842 (“ASC 842”), are effective for annual and interim reporting periods of public entities beginning after December 15, 2018. The Company adopted ASC 842 on a modified retrospective basis on January 1, 2019. The Company applied the transition method which does not require adjustments to comparative periods nor requires modified disclosures in those comparative periods. In addition, the Company elected the package of practical expedients, the practical expedient which permits combining lease and non-lease components (which was applicable to our real estate leases) and the short-term lease practical expedient. The Company implemented new leasing software capable of producing the data to prepare the required accounting and disclosures prescribed by ASC 842. Adoption of ASC 842 resulted in the recognition of right-of-use (“ROU”) assets and lease liabilities of $59.8 million and $67.9 million, respectively as of January 1, 2019. The adoption of ASC 842 did not have a material impact on the Company’s consolidated results of operations or cash flows. The cumulative effect of the change to our consolidated January 1, 2019 balance sheet for the adoption of ASC 842 was as follows (in thousands): Balance at December 31, 2018 Adjustments Due to ASC 842 Balance at January 1, 2019 Assets Deferred income taxes $ 3,411 $ 52 $ 3,463 Other long-term assets 24,530 59,820 84,350 Total Assets 2,979,056 59,872 3,038,928 Liabilities and Stockholders' Equity Accrued liabilities 231,356 13,018 244,374 Total Current Liabilities 898,893 13,018 911,911 Deferred credits and other long-term liabilities 36,483 46,999 83,482 Total Liabilities 1,693,753 60,017 1,753,770 Retained earnings 1,419,449 (145) 1,419,304 Total Stockholders' Equity 1,285,303 (145) 1,285,158 Total Liabilities and Stockholders' Equity 2,979,056 59,872 3,038,928 The impact of the adoption of ASC 842 on our consolidated balance sheet as of June 30, 2019 was as follows (in thousands): As Reported Adjustments Balance Without ASC 842 Adoption Assets Other long-term assets $ 107,431 $ (52,862) $ 54,569 Total Assets 3,077,791 (52,862) 3,024,929 Liabilities and Stockholders' Equity Accrued liabilities 260,980 (11,700) 249,280 Total Current Liabilities 925,127 (11,700) 913,427 Deferred credits and other long-term liabilities 76,482 (41,398) 35,084 Total Liabilities 1,743,521 (53,098) 1,690,423 Retained earnings 1,433,348 236 1,433,584 Total Stockholders' Equity 1,334,270 236 1,334,506 Total Liabilities and Stockholders' Equity 3,077,791 (52,862) 3,024,929 In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). This ASU amends the accounting on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. This guidance is effective for annual and interim periods of public entities beginning after December 15, 2019, with early adoption permitted for fiscal years beginning after December 31, 2018. The Company is currently assessing the potential impact this ASU will have on the Company’s consolidated results of operation, financial position and cash flows. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). The amendments in this ASU eliminate the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. This guidance is effective for annual and interim periods of public entities beginning after December 15, 2019, with early adoption permitted. The Company is currently assessing the potential impact this ASU will have on the Company’s consolidated results of operations, financial position and cash flows. In August 2018, the FASB issued ASU No. 2018-15, “Intangibles-Goodwill and Other–Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”). This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance is effective for annual and interim periods of public entities beginning after December 15, 2019, with early adoption permitted. The Company is currently assessing the potential impact this ASU will have on the Company’s consolidated results of operations, financial position and cash flows. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates of the Company can include, among other things, valuation of goodwill and intangible assets, medical claims payable, other medical liabilities, stock compensation assumptions, tax contingencies and legal liabilities. In addition, the Company also makes estimates in relation to revenue recognition under ASC 606 which are explained in more detail in “ Revenue Recognition |
Leases | Leases The Company leases certain office space, distribution centers, land and equipment. We assess our contracts to determine if it contains a lease. This assessment is based on (i) the right to control the use of an identified asset; (ii) the right to obtain substantially all of the economic benefits from the use of the identified asset; and (iii) the right to use the identified asset. The Company elected the short-term lease practical expedient; thus, leases with an initial term of twelve months or less are not capitalized and the expense is recognized on a straight-line basis. Most leases include one or more options to renew, with renewal terms that can extend the lease from one to ten years. The exercise of renewal options are at the sole discretion of the Company. Renewal options that the Company is reasonably certain to accept are recognized as part of the ROU asset. Operating leases are included in other long-term assets, accrued liabilities and deferred credits and other long-term liabilities in the consolidated balance sheets. Finance leases are included in property and equipment, current debt, capital lease deferred financing obligations and long-term debt, capital lease and deferred financing obligations in the consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments per the lease. Operating lease ROU assets and liabilities are recognized at lease commencement date based on the present value of lease payments over the lease term. As the rate implicit in most of our leases is not readily determinable, the Company used its incremental borrowing rate to determine the present value of lease payments. The following table shows the components of lease expenses for the three months ended June 30, 2019 (in thousands): Three months ended June 30, 2019 Operating lease cost $ 4,657 Finance lease cost: Amortization of right-of-use asset 1,018 Interest on lease liabilities 418 Total finance lease cost 1,436 Short-term lease cost 346 Variable lease cost 690 Total lease cost 7,129 Sublease income (102) Net lease cost $ 7,027 The following table shows the components of lease expenses for the six months ended June 30, 2019 (in thousands): Six months ended June 30, 2019 Operating lease cost $ 9,382 Finance lease cost: Amortization of right-of-use asset 1,958 Interest on lease liabilities 634 Total finance lease cost 2,592 Short-term lease cost 664 Variable lease cost 1,564 Total lease cost 14,202 Sublease income (200) Net lease cost $ 14,002 The following table shows the components of the lease assets and liabilities as of June 30, 2019 (in thousands): June 30, 2019 Operating leases: Other long-term assets $ 52,862 Accrued liabilities $ 13,334 Deferred credits and other long-term liabilities 47,773 Total operating lease liabilities $ 61,107 Finance leases: Property and equipment, net $ 14,670 Current debt, finance lease and deferred financing obligations $ 4,250 Long-term debt, finance lease and deferred financing obligations 15,846 Total finance lease liabilities $ 20,096 The maturity dates of the Company’s leases as of June 30, 2019 are summarized below (in thousands): June 30, 2019 2019 $ 9,446 2020 17,034 2021 16,423 2022 15,403 2023 11,426 2024 and beyond 13,758 Total lease payments 83,490 Less interest (2,287) Present value of lease liabilities $ 81,203 The following table shows the weighted average remaining lease term and discount rate as of June 30, 2019: June 30, 2019 Weighted average remaining lease term Operating leases 4.70 Finance leases 5.14 Weighted average discount rate Operating leases 4.79% Finance leases 4.52% Supplemental cash flow information relating to leases is as follows (in thousands): Six months ended June 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 8,852 Operating cash flows from finance leases 2,068 Financing cash flows from finance leases 427 Right-of-use asset obtained in exchange for new lease obligation Operating leases 937 Finance leases — |
Fair Value Measurements | Fair Value Measurements The Company has certain assets and liabilities that are required to be measured at fair value on a recurring basis. These assets and liabilities are to be measured using inputs from the three levels of the fair value hierarchy, which are as follows: Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2—Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). Level 3—Unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available, including the Company’s data. In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company’s assets and liabilities that are required to be measured at fair value as of December 31, 2018 and June 30, 2019 (in thousands): December 31, 2018 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ — $ 263,462 $ — $ 263,462 Investments: U.S. Government and agency securities 67,815 — — 67,815 Obligations of government-sponsored enterprises (2) — 5,229 — 5,229 Corporate debt securities — 292,049 — 292,049 Certificates of deposit — 20,650 — 20,650 Total assets held at fair value $ 67,815 $ 581,390 $ — $ 649,205 Liabilities Contingent consideration $ — $ — $ 10,124 $ 10,124 Total liabilities held at fair value $ — $ — $ 10,124 $ 10,124 June 30, 2019 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (3) $ — $ 256,083 $ — $ 256,083 Investments: U.S. Government and agency securities 110,361 — — 110,361 Obligations of government-sponsored enterprises (4) — 1,501 — 1,501 Corporate debt securities — 257,507 — 257,507 Certificates of deposit — 25,150 — 25,150 Total assets held at fair value $ 110,361 $ 540,241 $ — $ 650,602 Liabilities Contingent consideration $ — $ — $ 119 $ 119 Total liabilities held at fair value $ — $ — $ 119 $ 119 (1) Excludes $8.8 million of cash held in bank accounts by the Company. (2) Includes investments in notes issued by the Federal Home Loan Bank, Federal Farm Credit Banks and Federal National Mortgage Association. (3) Excludes $4.3 million of cash held in bank accounts by the Company. (4) Includes investments in notes issued by the Federal Home Loan Bank. For the six months ended June 30, 2019, the Company has not transferred any assets between fair value measurement levels. The carrying values of financial instruments, including accounts receivable, accounts payable and revolving loan borrowings, approximate their fair values due to their short-term maturities. The fair value of the Notes (as defined below) of $399.0 million as of June 30, 2019 was determined based on quoted market prices and would be classified within Level 1 of the fair value hierarchy. The estimated fair value of the Company’s term loan of $319.4 million as of June 30, 2019 was based on current interest rates for similar types of borrowings and is in Level 2 of the fair value hierarchy. The estimated fair values may not represent actual values of the financial instruments that could be realized as of the balance sheet date or that will be realized in the future. All of the Company’s investments are classified as “available-for-sale” and are carried at fair value. As of the balance sheet date, the fair value of contingent consideration is determined based on probabilities of payment, projected payment dates, discount rates, projected operating income, member engagement and new contract execution. The Company used a probability weighted discounted cash flow method to arrive at the fair value of the contingent consideration. As the fair value measurement for the contingent consideration is based on inputs not observed in the market, these measurements are classified as Level 3 measurements as defined by fair value measurement guidance. The unobservable inputs used in the fair value measurement include the discount rate, probabilities of payment and projected payment dates. As of December 31, 2018 and June 30, 2019, the Company estimated undiscounted future contingent payments of $10.6 million and $0.1 million, respectively. As of June 30, 2019, the aggregate amount of the future potential contingent consideration payment is $0.1 million which is projected to be paid in 2020. As of December 31, 2018, the fair value of the short-term and long-term contingent consideration was $8.0 million and $2.1 million, respectively, and is included in short-term contingent consideration and long-term contingent consideration, respectively, in the consolidated balance sheets. As of June 30, 2019, the fair value of the short-term contingent consideration was $0.1 million and is included in short-term contingent consideration in the consolidated balance sheets. The change in the fair value of the contingent consideration was $0.1 million and $0.3 million for the three and six months ended June 30, 2018, respectively, and $(2.1) million and $(2.0) million for the three and six months ended June 30, 2019, respectively, which were recorded as direct service costs and other operating expenses in the consolidated statements of comprehensive income. The following table summarizes the Company’s liability for contingent consideration for the six months ended June 30, 2019 (in thousands): June 30, 2019 Balance as of beginning of period $ 10,124 Changes in fair value (2,005) Payments (8,000) Balance as of end of period $ 119 |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash equivalents are short-term, highly liquid interest-bearing investments with maturity dates of three months or less when purchased, consisting primarily of money market instruments. Bank overdrafts are reflected within accounts payable on the balance sheets. There were no bank overdrafts at December 31, 2018. At June 30, 2019, the Company had $3.9 million in bank overdrafts. At June 30, 2019, the Company’s excess capital and undistributed earnings for the Company’s regulated subsidiaries of $73.0 million are included in cash and cash equivalents. |
Investments | Investments If a debt security is in an unrealized loss position and the Company has the intent to sell the debt security, or it is more likely than not that the Company will have to sell the debt security before recovery of its amortized cost basis, the decline in value is deemed to be other-than-temporary and is recorded to other-than-temporary impairment losses recognized in income in the consolidated statements of comprehensive income. For impaired debt securities that the Company does not intend to sell or it is more likely than not that the Company will not have to sell such securities, but the Company expects that it will not fully recover the amortized cost basis, the credit component of the other-than-temporary impairment is recognized in other-than-temporary impairment losses recognized in net income and the non-credit component of the other-than-temporary impairment is recognized in other comprehensive income in the consolidated statements of comprehensive income. As of December 31, 2018 and June 30, 2019, there were no material unrealized losses that the Company determined to be other-than-temporary. No realized gains or losses were recorded for the six months ended June 30, 2018 or 2019. The following is a summary of short-term and long-term investments at December 31, 2018 and June 30, 2019 (in thousands): December 31, 2018 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value U.S. Government and agency securities $ 67,870 $ 17 $ (72) $ 67,815 Obligations of government-sponsored enterprises (1) 5,257 — (28) 5,229 Corporate debt securities 292,392 6 (349) 292,049 Certificates of deposit 20,650 — — 20,650 Total investments at December 31, 2018 $ 386,169 $ 23 $ (449) $ 385,743 June 30, 2019 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value U.S. Government and agency securities $ 110,209 $ 158 $ (6) $ 110,361 Obligations of government-sponsored enterprises (2) 1,503 — (2) 1,501 Corporate debt securities 257,112 396 (1) 257,507 Certificates of deposit 25,150 — — 25,150 Total investments at June 30, 2019 $ 393,974 $ 554 $ (9) $ 394,519 (1) Includes investments in notes issued by the Federal Home Loan Bank, Federal National Mortgage Association and Federal Farm Credit Banks. (2) Includes investment in notes issued by the Federal Home Loan Bank. The maturity dates of the Company’s investments as of June 30, 2019 are summarized below (in thousands): Amortized Estimated Cost Fair Value 2019 $ 226,389 $ 226,537 2020 167,071 167,464 2021 514 518 Total investments at June 30, 2019 $ 393,974 $ 394,519 Income Taxes The Company’s effective income tax rates were 16.0 percent and 36.7 percent for the six months ended June 30, 2018 and 2019, respectively. These rates differ from the federal statutory income tax rate primarily due to state income taxes, permanent differences between book and tax income, and changes to recorded tax contingencies. The Company also accrues interest and penalties related to uncertain tax positions in its provision for income taxes. The effective income tax rate for the six months ended June 30, 2018 is lower than the effective income tax rate for the six months ended June 30, 2019 due to permanent differences related to stock compensation expense. The Company files a consolidated federal income tax return with its eighty-percent or more controlled subsidiaries. The Company and its subsidiaries also file income tax returns in various state and local jurisdictions. During 2018, the Internal Revenue Service (“IRS”) began examinations of the following federal consolidated income tax returns: (i) the Company for the year ended December 31, 2015, (ii) SWH Holdings, Inc. for the year ended December 31, 2016, and (iii) AlphaCare Holdings for the year ended December 31, 2016. During 2018, the IRS concluded its review of the Company’s 2015 return. In resolution of that examination, the Company paid federal taxes of $0.3 million in the quarter ended September 30, 2018. On April, 18, 2019, the Company received a “no change” letter regarding the AlphaCare Holdings examination. And on June 29, 2019, the IRS verbally indicated a “no change” letter is being processed regarding the SWH Holdings examination. |
Income Taxes | Amortized Estimated Cost Fair Value 2019 $ 226,389 $ 226,537 2020 167,071 167,464 2021 514 518 Total investments at June 30, 2019 $ 393,974 $ 394,519 |
Net Operating Loss Carryforwards | Net Operating Loss Carryforwards The Company has $27.7 million of federal net operating loss carryforwards (“NOLs”) available to reduce consolidated taxable income in 2019 and subsequent years. These NOLs (including $27.1 million incurred by AlphaCare prior to its membership in the Magellan consolidated group) will expire in 2019 through 2035 if not used and are subject to examination and adjustment by the IRS. In addition, the Company’s utilization of these NOLs is subject to limitations under the Internal Revenue Code as to the timing and use. At this time, the Company does not believe these limitations will restrict the Company’s ability to use any federal NOLs before they expire. The Company and its subsidiaries also have $88.2 million of NOLs available to reduce state and local taxable income at certain subsidiaries in 2019 and subsequent years. Most of these NOLs will expire in 2019 through 2038 if not used and are subject to examination and adjustment by the respective tax authorities. In addition, the Company’s utilization of certain of these NOLs is subject to limitations as to the timing and use. Other than those considered in determining the valuation allowances discussed below, the Company does not believe these limitations will restrict the Company’s ability to use any of these state and local NOLs before they expire. Deferred tax assets as of December 31, 2018 and June 30, 2019 are shown net of valuation allowances of $1.5 million. These valuation allowances mostly relate to uncertainties regarding the eventual realization of certain state NOLs. Reversals of valuation allowances are recorded in the period they occur, typically as reductions to income tax expense. Determination of the amount of deferred tax assets considered realizable requires significant judgment and estimation regarding the forecasts of future taxable income which are consistent with the plans and estimates the Company uses to manage the underlying businesses. Although consideration is also given to potential tax planning strategies which might be available to improve the realization of deferred tax assets, none were identified which were both prudent and reasonable. The Company believes taxable income expected to be generated in the future will be sufficient to support realization of the Company’s deferred tax assets, as reduced by valuation allowances. This determination is based upon earnings history and future earnings expectations. |
Health Care Reform | Health Care Reform The Patient Protection and the Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “Health Reform Law”), imposes a mandatory annual fee on health insurers for each calendar year beginning on or after January 1, 2014. The Company has obtained rate adjustments from customers which the Company expects will cover the direct costs of these fees and the impact from non-deductibility of such fees for federal and state income tax purposes. To the extent the Company has such a customer that does not renew, there may be some impact due to taxes paid where the timing and amount of recoupment of these additional costs is uncertain. In the event the Company is unable to obtain rate adjustments to cover the financial impact of the annual fee, the fee may have a material impact on the Company. On January 23, 2018, the United States Congress passed the Continuing Resolution which imposed a one-year moratorium on the HIF fee, suspending its application for 2019. For 2018 the HIF fee was $29.9 million which was paid in 2018. |
Stock Compensation | Sto ck Compensation At December 31, 2018 and June 30, 2019, the Company had equity-based employee incentive plans, which are described more fully in Note 6 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on February 28, 2019. The Company recorded stock compensation expense of $10.4 million and $18.1 million for the three and six months ended June 30, 2018, respectively, and $5.4 million and $15.0 million for the three and six months ended June 30, 2019, respectively. Stock compensation expense recognized in the consolidated statements of comprehensive income for the three and six months ended June 30, 2018 and 2019 has been reduced for forfeitures, estimated at between zero and four percent for all periods. The weighted average grant date fair value of all stock options granted during the six months ended June 30, 2019 was $20.62 as estimated using the Black-Scholes-Merton option pricing model, which also assumed an expected volatility of 35.07 percent based on the historical volatility of the Company’s stock price. For the six months ended June 30, 2018 the benefit of tax deductions in excess of recognized stock compensation expense (net of deficiencies) was $4.9 million and was included as a reduction of tax expense. For the six months ended June 30, 2019 the tax on deficiencies (net of the tax deductions in excess of recognized stock compensation expense) was $1.6 million and was included as an increase to income tax expense. Summarized information related to the Company’s stock options for the six months ended June 30, 2019 is as follows: Weighted Average Exercise Options Price Outstanding, beginning of period 2,352,609 $ 68.10 Granted 412,624 66.06 Forfeited (43,672) 82.28 Exercised (389,268) 60.31 Outstanding, end of period 2,332,293 $ 68.77 Vested and expected to vest at end of period 2,313,024 $ 68.74 Exercisable, end of period 1,498,260 $ 64.40 All of the Company’s options granted during the six months ended June 30, 2019 vest ratably on each anniversary date over the three years subsequent to grant and have a ten year life. Summarized information related to the Company’s nonvested restricted stock awards (“RSAs”) for the six months ended June 30, 2019 is as follows: Weighted Average Grant Date Shares Fair Value Outstanding, beginning of period 11,795 $ 89.05 Awarded 20,152 66.93 Vested (13,939) 85.99 Forfeited — — Outstanding, ending of period 18,008 66.66 Weighted Average Grant Date Shares Fair Value Outstanding, beginning of period 156,750 $ 86.68 Awarded 186,325 66.57 Vested (68,993) 81.95 Forfeited (14,288) 82.76 Outstanding, ending of period 259,794 73.73 Grants of RSAs vest on the anniversary of the grant. In general, RSUs vest ratably on each anniversary over the three years subsequent to grant. Summarized information related to the Company’s nonvested restricted performance stock units (“PSUs”) for the six months ended June 30, 2019 is as follows: Weighted Average Grant Date Shares Fair Value Outstanding, beginning of period 209,019 $ 103.38 Awarded 83,087 100.31 Vested (43,109) 97.12 Forfeited (12,157) 97.12 Outstanding, end of period 236,840 103.76 The weighted average estimated fair value of the PSUs granted in the six months ended June 30, 2019 was $100.31, which was derived from a Monte Carlo simulation. Significant assumptions utilized in estimating the value of the awards granted include an expected dividend yield of 0%, a risk free rate of 2.51%, and expected volatility of 19% to 82% (average of 36%). The PSUs granted in the six months ended June 30, 2019, will entitle the grantee to receive a number of shares of the Company’s common stock determined over a three-year performance period ending on December 31, 2021 and vesting on March 5, 2022, the settlement date, provided the grantee remains in the service of the Company on the settlement date. The Company expenses the cost of these awards ratably over the requisite service period. The number of shares for which the PSUs will be settled is calculated as a percentage of the award target and will depend on the Company’s total shareholder return (as defined below), expressed as a percentile ranking of the Company’s total shareholder return as compared to the Company’s peer group (as defined below). The number of shares for which the PSUs will be settled varies from zero to 200 percent of the shares specified in the grant. Total shareholder return is determined by dividing the average share value of the Company’s common stock over the 30 trading days preceding January 1, 2022 by the average share value of the Company’s common stock over the 30 trading days beginning on January 1, 2019, with a deemed reinvestment of any dividends declared during the performance period. The Company’s peer group includes 48 companies which comprise the S&P Health Care Services Industry Index, which was selected by the compensation committee of the Company’s board of directors and includes a range of healthcare companies operating in several business segments. |
Long Term Debt and Finance Lease Obligations | Long-Term Debt and Finance Lease Obligations Senior Notes On September 22, 2017, the Company completed the public offering of $400.0 million aggregate principal amount of its 4.400% Senior Notes due 2024 (the “Notes”). The Notes are governed by an indenture, dated as of September 22, 2017 (the “Base Indenture”), between the Company, as issuer, and U.S. Bank National Association, as trustee, as supplemented by a first supplemental indenture, dated as of September 22, 2017 (the “First Supplemental Indenture” together, with the Base Indenture, the “Indenture”), between the Company, as issuer, and U.S. Bank National Association, as trustee. The Notes were issued at a discount and had a carrying value of $399.3 million as of December 31, 2018 and June 30, 2019. The Notes bear interest payable semiannually in cash in arrears on March 22 and September 22 of each year, commencing on March 22, 2018, which rate is subject to an interest rate adjustment upon the occurrence of certain credit rating events. The Notes mature on September 22, 2024. The Indenture provides that the Notes are redeemable at the Company’s option, in whole or in part, at any time on or after July 22, 2024, at a redemption price equal to 100% of the principal amount of the Notes being redeemed plus accrued and unpaid interest thereon to, but excluding, the redemption date. The Indenture also contains certain covenants which restrict the Company’s ability to, among other things, create liens on its and its subsidiaries’ assets; engage in sale and lease-back transactions; and engage in a consolidation, merger or sale of assets. Credit Agreement On September 22, 2017, the Company entered into a credit agreement with various lenders that provides for a $400.0 million senior unsecured revolving credit facility and a $350.0 million senior unsecured term loan facility to the Company, as the borrower (the “2017 Credit Agreement”). On August 13, 2018, the Company entered into an amendment to the 2017 Credit Agreement, which extended the maturity date by one year. On February 27, 2019, the Company entered into a second amendment to the 2017 Credit Agreement, which amended the total leverage ratio covenant, and which was necessary in order for us to remain in compliance with the terms of the 2017 Credit Agreement. The 2017 Credit Agreement is scheduled to mature on September 22, 2023. Under the 2017 Credit Agreement, the annual interest rate on the loan borrowing is equal to (i) in the case of base rate loans, the sum of an initial borrowing margin of 0.500 percent plus the higher of the prime rate, one-half of one percent in excess of the overnight “federal funds” rate, or the Eurodollar rate for one month plus 1.000 percent, or (ii) in the case of Eurodollar rate loans, the sum of an initial borrowing margin of 1.500 percent plus the Eurodollar rate for the selected interest period. The borrowing margin is subject to adjustment based on the Company’s debt rating as provided by certain rating agencies. The Company has the option to borrow in base rate loans or Eurodollar rate loans at its discretion. The commitment commission on the revolving credit facility under the 2017 Credit Agreement is 0.200 percent of the unused revolving credit commitment, which rate shall be subject to adjustment based on the Company’s debt rating as provided by certain rating agencies. For the six months ended June 30, 2019, the weighted average interest rate was approximately 4.2875 percent. As of June 30, 2019, the contractual maturities of the term loan under the 2017 Credit Agreement were as follows: 2019—$8.8 million; 2020—$17.5 million; 2021—$17.5 million; 2022—$17.5 million; and 2023—$258.1 million. Due to the timing of working capital needs, the Company will periodically borrow from the revolving loan under the 2017 Credit Agreement. At December 31, 2018 and June 30, 2019, the Company had no revolving loan borrowings. At June 30, 2019, the Company had a borrowing capacity of $400.0 million under the 2017 Credit Agreement. Included in long-term debt, capital lease and deferred financing obligations are deferred loan and bond issuance costs as of December 31, 2018 and June 30, 2019 of $5.9 million and $6.5 million, respectively. Letter of Credit Agreement On August 22, 2017, the Company entered into a Continuing Agreement for Standby Letters of Credit with The Bank of Tokyo-Mitsubishi UFJ, Ltd. (“BTMU”), as issuer (the “L/C Agreement”), under which BTMU, at its sole discretion, may provide stand-by letter of credit to the Company. The Company had letters of credit outstanding under the L/C Agreement as of December 31, 2018 and June 30, 2019 of $66.1 million and $66.4 million, respectively. Finance Lease and Deferred Financing Obligations There were $21.7 million and $20.1 million of finance lease obligations at December 31, 2018 and June 30, 2019, respectively. There were $9.5 million and $1.3 million of deferred financing obligations at December 31, 2018 and June 30, 2019, respectively. The Company’s finance lease and deferred financing obligations represent amounts due under leases for certain properties, computer software (acquired prior to the prospective adoption of ASU 2015-05 on January 1, 2016) and equipment. The recorded gross cost of finance lease assets was $51.9 million and $55.7 million at December 31, 2018 and June 30, 2019, respectively. |
General (Tables)
General (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Summary of impacts of adoption of ASC 842 | The cumulative effect of the change to our consolidated January 1, 2019 balance sheet for the adoption of ASC 842 was as follows (in thousands): Balance at December 31, 2018 Adjustments Due to ASC 842 Balance at January 1, 2019 Assets Deferred income taxes $ 3,411 $ 52 $ 3,463 Other long-term assets 24,530 59,820 84,350 Total Assets 2,979,056 59,872 3,038,928 Liabilities and Stockholders' Equity Accrued liabilities 231,356 13,018 244,374 Total Current Liabilities 898,893 13,018 911,911 Deferred credits and other long-term liabilities 36,483 46,999 83,482 Total Liabilities 1,693,753 60,017 1,753,770 Retained earnings 1,419,449 (145) 1,419,304 Total Stockholders' Equity 1,285,303 (145) 1,285,158 Total Liabilities and Stockholders' Equity 2,979,056 59,872 3,038,928 The impact of the adoption of ASC 842 on our consolidated balance sheet as of June 30, 2019 was as follows (in thousands): As Reported Adjustments Balance Without ASC 842 Adoption Assets Other long-term assets $ 107,431 $ (52,862) $ 54,569 Total Assets 3,077,791 (52,862) 3,024,929 Liabilities and Stockholders' Equity Accrued liabilities 260,980 (11,700) 249,280 Total Current Liabilities 925,127 (11,700) 913,427 Deferred credits and other long-term liabilities 76,482 (41,398) 35,084 Total Liabilities 1,743,521 (53,098) 1,690,423 Retained earnings 1,433,348 236 1,433,584 Total Stockholders' Equity 1,334,270 236 1,334,506 Total Liabilities and Stockholders' Equity 3,077,791 (52,862) 3,024,929 |
Schedule of disaggregation of revenue by major service line, type of customer and timing of revenue recognition | Three Months Ended June 30, 2019 Healthcare Pharmacy Management Elimination Total Major Service Lines Behavioral & Specialty Health Risk-based, non-EAP $ 400,591 $ — $ (65) $ 400,526 EAP risk-based 87,296 — — 87,296 ASO 57,995 10,327 (82) 68,240 Magellan Complete Care Risk-based, non-EAP 659,362 — — 659,362 ASO 15,398 — — 15,398 PBM, including dispensing — 480,167 (44,817) 435,350 Medicare Part D — 69,843 — 69,843 PBA — 33,476 — 33,476 Formulary management — 18,426 — 18,426 Other — 419 — 419 Total net revenue $ 1,220,642 $ 612,658 $ (44,964) $ 1,788,336 Type of Customer Government $ 910,543 $ 173,804 $ — $ 1,084,347 Non-government 310,099 438,854 (44,964) 703,989 Total net revenue $ 1,220,642 $ 612,658 $ (44,964) $ 1,788,336 Timing of Revenue Recognition Transferred at a point in time $ — $ 550,010 $ (44,817) $ 505,193 Transferred over time 1,220,642 62,648 (147) 1,283,143 Total net revenue $ 1,220,642 $ 612,658 $ (44,964) $ 1,788,336 Six Months Ended June 30, 2019 Healthcare Pharmacy Management Elimination Total Major Service Lines Behavioral & Specialty Health Risk-based, non-EAP $ 762,399 $ — $ (143) $ 762,256 EAP risk-based 176,913 — — 176,913 ASO 113,198 18,470 (173) 131,495 Magellan Complete Care Risk-based, non-EAP 1,301,933 — — 1,301,933 ASO 30,452 — — 30,452 PBM, including dispensing — 973,392 (85,872) 887,520 Medicare Part D — 133,183 — 133,183 PBA — 67,453 — 67,453 Formulary management — 35,609 — 35,609 Other — 1,011 — 1,011 Total net revenue $ 2,384,895 $ 1,229,118 $ (86,188) $ 3,527,825 Type of Customer Government $ 1,799,036 $ 401,852 $ — $ 2,200,888 Non-government 585,859 827,266 (86,188) 1,326,937 Total net revenue $ 2,384,895 $ 1,229,118 $ (86,188) $ 3,527,825 Timing of Revenue Recognition Transferred at a point in time $ — $ 1,106,575 $ (85,872) $ 1,020,703 Transferred over time 2,384,895 122,543 (316) 2,507,122 Total net revenue $ 2,384,895 $ 1,229,118 $ (86,188) $ 3,527,825 |
Schedule of accounts receivable, contract assets and contract liabilities | Accounts receivable, contract assets and contract liabilities consisted of the following (in thousands, except percentages): December 31, June 30, 2018 2019 $ Change % Change Accounts receivable $ 786,395 $ 854,715 $ 68,320 8.7% Contract assets 4,647 12,891 8,244 177.4% Contract liabilities - current 16,853 7,809 (9,044) (53.7%) Contract liabilities - long-term 13,441 12,187 (1,254) (9.3%) |
Schedule of customers generating in excess of ten percent of net revenues for respective segment | In addition to the Massachusetts Contract, New York Contract and Virginia Contract previously discussed, the following customers generated in excess of ten percent of net revenues for the respective segment for the six months ended June 30, 2018 and 2019 (in thousands): Segment Term Date 2018 2019 Healthcare Customer A December 31, 2023 $ 307,902 $ 118,061 * Pharmacy Management Customer B March 31, 2021 176,650 174,535 * Revenue amount did not exceed 10 percent of net revenues for the respective segment for the year presented. Amount is shown for comparative purposes only. |
Schedule of components of lease expenses | The following table shows the components of lease expenses for the six months ended June 30, 2019 (in thousands): Six months ended June 30, 2019 Operating lease cost $ 9,382 Finance lease cost: Amortization of right-of-use asset 1,958 Interest on lease liabilities 634 Total finance lease cost 2,592 Short-term lease cost 664 Variable lease cost 1,564 Total lease cost 14,202 Sublease income (200) Net lease cost $ 14,002 |
Schedule of components of lease assets and liabilities | The following table shows the components of the lease assets and liabilities as of June 30, 2019 (in thousands): June 30, 2019 Operating leases: Other long-term assets $ 52,862 Accrued liabilities $ 13,334 Deferred credits and other long-term liabilities 47,773 Total operating lease liabilities $ 61,107 Finance leases: Property and equipment, net $ 14,670 Current debt, finance lease and deferred financing obligations $ 4,250 Long-term debt, finance lease and deferred financing obligations 15,846 Total finance lease liabilities $ 20,096 |
Schedule of maturity dates of leases | The maturity dates of the Company’s leases as of June 30, 2019 are summarized below (in thousands): June 30, 2019 2019 $ 9,446 2020 17,034 2021 16,423 2022 15,403 2023 11,426 2024 and beyond 13,758 Total lease payments 83,490 Less interest (2,287) Present value of lease liabilities $ 81,203 |
Schedule of weighted average remaining term and discount rate of leases | The following table shows the weighted average remaining lease term and discount rate as of June 30, 2019: June 30, 2019 Weighted average remaining lease term Operating leases 4.70 Finance leases 5.14 Weighted average discount rate Operating leases 4.79% Finance leases 4.52% |
Schedule of supplemental cash flow information relating to leases | Supplemental cash flow information relating to leases is as follows (in thousands): Six months ended June 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 8,852 Operating cash flows from finance leases 2,068 Financing cash flows from finance leases 427 Right-of-use asset obtained in exchange for new lease obligation Operating leases 937 Finance leases — |
Schedule of fair value of financial assets and liabilities | In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company’s assets and liabilities that are required to be measured at fair value as of December 31, 2018 and June 30, 2019 (in thousands): December 31, 2018 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ — $ 263,462 $ — $ 263,462 Investments: U.S. Government and agency securities 67,815 — — 67,815 Obligations of government-sponsored enterprises (2) — 5,229 — 5,229 Corporate debt securities — 292,049 — 292,049 Certificates of deposit — 20,650 — 20,650 Total assets held at fair value $ 67,815 $ 581,390 $ — $ 649,205 Liabilities Contingent consideration $ — $ — $ 10,124 $ 10,124 Total liabilities held at fair value $ — $ — $ 10,124 $ 10,124 June 30, 2019 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (3) $ — $ 256,083 $ — $ 256,083 Investments: U.S. Government and agency securities 110,361 — — 110,361 Obligations of government-sponsored enterprises (4) — 1,501 — 1,501 Corporate debt securities — 257,507 — 257,507 Certificates of deposit — 25,150 — 25,150 Total assets held at fair value $ 110,361 $ 540,241 $ — $ 650,602 Liabilities Contingent consideration $ — $ — $ 119 $ 119 Total liabilities held at fair value $ — $ — $ 119 $ 119 (1) Excludes $8.8 million of cash held in bank accounts by the Company. (2) Includes investments in notes issued by the Federal Home Loan Bank, Federal Farm Credit Banks and Federal National Mortgage Association. (3) Excludes $4.3 million of cash held in bank accounts by the Company. (4) Includes investments in notes issued by the Federal Home Loan Bank. |
Summary of the Company's liability for contingent consideration | The following table summarizes the Company’s liability for contingent consideration for the six months ended June 30, 2019 (in thousands): June 30, 2019 Balance as of beginning of period $ 10,124 Changes in fair value (2,005) Payments (8,000) Balance as of end of period $ 119 |
Summary of short-term and long-term investments | December 31, 2018 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value U.S. Government and agency securities $ 67,870 $ 17 $ (72) $ 67,815 Obligations of government-sponsored enterprises (1) 5,257 — (28) 5,229 Corporate debt securities 292,392 6 (349) 292,049 Certificates of deposit 20,650 — — 20,650 Total investments at December 31, 2018 $ 386,169 $ 23 $ (449) $ 385,743 June 30, 2019 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value U.S. Government and agency securities $ 110,209 $ 158 $ (6) $ 110,361 Obligations of government-sponsored enterprises (2) 1,503 — (2) 1,501 Corporate debt securities 257,112 396 (1) 257,507 Certificates of deposit 25,150 — — 25,150 Total investments at June 30, 2019 $ 393,974 $ 554 $ (9) $ 394,519 (1) Includes investments in notes issued by the Federal Home Loan Bank, Federal National Mortgage Association and Federal Farm Credit Banks. (2) Includes investment in notes issued by the Federal Home Loan Bank. |
Summary of maturity dates of investments | The maturity dates of the Company’s investments as of June 30, 2019 are summarized below (in thousands): Amortized Estimated Cost Fair Value 2019 $ 226,389 $ 226,537 2020 167,071 167,464 2021 514 518 Total investments at June 30, 2019 $ 393,974 $ 394,519 |
Schedule of stock option activity | Summarized information related to the Company’s stock options for the six months ended June 30, 2019 is as follows: Weighted Average Exercise Options Price Outstanding, beginning of period 2,352,609 $ 68.10 Granted 412,624 66.06 Forfeited (43,672) 82.28 Exercised (389,268) 60.31 Outstanding, end of period 2,332,293 $ 68.77 Vested and expected to vest at end of period 2,313,024 $ 68.74 Exercisable, end of period 1,498,260 $ 64.40 |
Schedule of nonvested restricted stock award activity | Summarized information related to the Company’s nonvested restricted stock awards (“RSAs”) for the six months ended June 30, 2019 is as follows: Weighted Average Grant Date Shares Fair Value Outstanding, beginning of period 11,795 $ 89.05 Awarded 20,152 66.93 Vested (13,939) 85.99 Forfeited — — Outstanding, ending of period 18,008 66.66 |
Schedule of nonvested restricted stock units | Weighted Average Grant Date Shares Fair Value Outstanding, beginning of period 156,750 $ 86.68 Awarded 186,325 66.57 Vested (68,993) 81.95 Forfeited (14,288) 82.76 Outstanding, ending of period 259,794 73.73 |
Schedule of nonvested restricted performance stock units | Summarized information related to the Company’s nonvested restricted performance stock units (“PSUs”) for the six months ended June 30, 2019 is as follows: Weighted Average Grant Date Shares Fair Value Outstanding, beginning of period 209,019 $ 103.38 Awarded 83,087 100.31 Vested (43,109) 97.12 Forfeited (12,157) 97.12 Outstanding, end of period 236,840 103.76 |
Net Income per Common Share A_2
Net Income per Common Share Attributable to Magellan Health, Inc. (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Schedule of computation of basic and diluted earnings per share | The following table reconciles income attributable to common shareholders (numerator) and shares (denominator) used in the computations of net income per share attributable to common shareholders (in thousands, except per share data) for the three and six months ended June 30: Three Months Ended Six Months Ended June 30, June 30, 2018 2019 2018 2019 Numerator: Net income $ 13,551 $ 13,613 $ 25,003 $ 14,044 Denominator: Weighted average number of common shares outstanding—basic 24,569 24,101 24,460 24,024 Common stock equivalents—stock options 669 153 738 132 Common stock equivalents—RSAs 33 7 28 7 Common stock equivalents—RSUs 23 18 50 19 Common stock equivalents—PSUs 111 130 232 127 Common stock equivalents—employee stock purchase plan 2 7 2 6 Weighted average number of common shares outstanding—diluted 25,407 24,416 25,510 24,315 Net income per common share—basic $ 0.55 $ 0.56 $ 1.02 $ 0.58 Net income per common share—diluted $ 0.53 $ 0.56 $ 0.98 $ 0.58 |
Business Segment Information (T
Business Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Schedule of operating results by business segment | The following tables summarize, for the periods indicated, operating results by business segment (in thousands): Corporate Pharmacy and Healthcare Management Elimination Consolidated Three Months Ended June 30, 2018 Managed care and other revenue $ 1,154,888 $ 60,603 $ (151) $ 1,215,340 PBM revenue — 642,794 (47,211) 595,583 Cost of care (935,814) — — (935,814) Cost of goods sold — (603,951) 45,532 (558,419) Direct service costs and other (177,990) (70,941) (10,221) (259,152) Stock compensation expense (1) 2,742 1,408 6,289 10,439 Changes in fair value of contingent consideration (1) 70 — — 70 Segment Profit (Loss) $ 43,896 $ 29,913 $ (5,762) $ 68,047 Corporate Pharmacy and Healthcare Management Elimination Consolidated Three Months Ended June 30, 2019 Managed care and other revenue $ 1,220,642 $ 62,648 $ (147) $ 1,283,143 PBM revenue — 550,010 (44,817) 505,193 Cost of care (1,001,886) — — (1,001,886) Cost of goods sold — (505,203) 44,016 (461,187) Direct service costs and other (177,948) (78,776) (9,710) (266,434) Stock compensation expense (1) 2,444 2,124 846 5,414 Changes in fair value of contingent consideration (1) (2,149) — — (2,149) Segment Profit (Loss) $ 41,103 $ 30,803 $ (9,812) $ 62,094 Corporate Pharmacy and Healthcare Management Elimination Consolidated Six Months Ended June 30, 2018 Managed care and other revenue $ 2,312,489 $ 122,910 $ (296) $ 2,435,103 PBM revenue — 1,274,992 (94,095) 1,180,897 Cost of care (1,864,475) — — (1,864,475) Cost of goods sold — (1,208,864) 90,780 (1,118,084) Direct service costs and other (364,236) (146,527) (17,466) (528,229) Stock compensation expense (1) 5,692 2,893 9,500 18,085 Changes in fair value of contingent consideration (1) 303 — — 303 Segment Profit (Loss) $ 89,773 $ 45,404 $ (11,577) $ 123,600 Corporate Pharmacy and Healthcare Management Elimination Consolidated Six Months Ended June 30, 2019 Managed care and other revenue $ 2,384,895 $ 122,543 $ (316) $ 2,507,122 PBM revenue — 1,106,575 (85,872) 1,020,703 Cost of care (1,943,847) — — (1,943,847) Cost of goods sold — (1,035,410) 84,430 (950,980) Direct service costs and other (357,138) (158,411) (22,809) (538,358) Stock compensation expense (1) 4,194 3,796 7,031 15,021 Changes in fair value of contingent consideration (1) (2,005) — — (2,005) Segment Profit (Loss) $ 86,099 $ 39,093 $ (17,536) $ 107,656 (1) Stock compensation expense, changes in the fair value of contingent consideration recorded in relation to 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. |
Schedule of reconciliation of Segment Profit to income before income taxes | The following table reconciles income before income taxes to Segment Profit (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2018 2019 2018 2019 Income before income taxes $ 18,375 $ 21,219 $ 29,752 $ 22,189 Stock compensation expense 10,439 5,414 18,085 15,021 Changes in fair value of contingent consideration 70 (2,149) 303 (2,005) Depreciation and amortization 33,848 33,490 64,255 64,198 Interest expense 8,678 9,141 17,044 18,248 Interest and other income (3,363) (5,021) (5,839) (9,995) Segment Profit $ 68,047 $ 62,094 $ 123,600 $ 107,656 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
October 2015 Share Repurchase Program | |
Schedule of stock repurchases made | Pursuant to the 2015 Stock Repurchase Program, the Company made purchases as follows (aggregate cost excludes broker commissions and is reflected in millions): Total Number Average of Shares Price Paid Aggregate Period Purchased per Share Cost October 26, 2015 - December 31, 2015 345,044 $ 53.46 $ 18.4 January 1, 2016 - December 31, 2016 1,828,183 58.40 106.8 January 1, 2017 - December 31, 2017 280,140 77.67 21.8 January 1, 2018 - December 31, 2018 844,872 74.59 63.0 January 1, 2019 - June 30, 2019 60,901 61.15 3.7 3,359,140 $ 213.7 |
General - Business Overview (De
General - Business Overview (Details) | 6 Months Ended |
Jun. 30, 2019segment | |
Operating results by business segment | |
Number of segments | 3 |
Healthcare | |
Operating results by business segment | |
Number of reporting units | 2 |
General - Cumulative Effect of
General - Cumulative Effect of Changes for Adoption of ASC 842 (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | |
Leases | |||
Change in Accounting Principle, Accounting Standards Update, Transition Option Elected | Modified Retrospective | ||
Election of package of practical expedients | true | ||
Operating lease right-of-use assets | $ 52,862 | ||
Assets | |||
Deferred income taxes | 3,212 | $ 3,463 | $ 3,411 |
Other long-term assets | 107,431 | 84,350 | 24,530 |
Total Assets | 3,077,791 | 3,038,928 | 2,979,056 |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Accrued liabilities | 260,980 | 244,374 | 231,356 |
Total Current Liabilities | 925,127 | 911,911 | 898,893 |
Deferred credits and other long-term liabilities | 76,482 | 83,482 | 36,483 |
Total Liabilities | 1,743,521 | 1,753,770 | 1,693,753 |
Retained earnings | 1,433,348 | 1,419,304 | 1,419,449 |
Total Stockholders' Equity | 1,334,270 | 1,285,158 | 1,285,303 |
Total Liabilities and Stockholders' Equity | $ 3,077,791 | 3,038,928 | $ 2,979,056 |
Accounting Standards Update 2016-02 | |||
Leases | |||
Change in Accounting Principle, Accounting Standards Update, Adopted | true | ||
Change in Accounting Principle, Accounting Standards Update, Early Adoption | false | ||
Change in Accounting Principle, Accounting Standards Update, Adoption Date | Jan. 1, 2019 | ||
New Accounting Pronouncement or Change in Accounting Principle, Prior Period Not Restated | true | ||
Operating lease right-of-use assets | 59,800 | ||
Lease liabilities | 67,900 | ||
Accounting Standards Update 2016-02 | Adjustments | |||
Assets | |||
Deferred income taxes | 52 | ||
Other long-term assets | $ (52,862) | 59,820 | |
Total Assets | (52,862) | 59,872 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Accrued liabilities | (11,700) | 13,018 | |
Total Current Liabilities | (11,700) | 13,018 | |
Deferred credits and other long-term liabilities | (41,398) | 46,999 | |
Total Liabilities | (53,098) | 60,017 | |
Retained earnings | 236 | (145) | |
Total Stockholders' Equity | 236 | (145) | |
Total Liabilities and Stockholders' Equity | $ (52,862) | $ 59,872 |
General - Impact of Adoption of
General - Impact of Adoption of ASC 842 on Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Assets | |||
Other long-term assets | $ 107,431 | $ 84,350 | $ 24,530 |
Total Assets | 3,077,791 | 3,038,928 | 2,979,056 |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Accrued liabilities | 260,980 | 244,374 | 231,356 |
Total Current Liabilities | 925,127 | 911,911 | 898,893 |
Deferred credits and other long-term liabilities | 76,482 | 83,482 | 36,483 |
Total Liabilities | 1,743,521 | 1,753,770 | 1,693,753 |
Retained earnings | 1,433,348 | 1,419,304 | 1,419,449 |
Total Stockholders' Equity | 1,334,270 | 1,285,158 | 1,285,303 |
Total Liabilities and Stockholders' Equity | 3,077,791 | 3,038,928 | $ 2,979,056 |
Accounting Standards Update 2016-02 | Adjustments | |||
Assets | |||
Other long-term assets | (52,862) | 59,820 | |
Total Assets | (52,862) | 59,872 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Accrued liabilities | (11,700) | 13,018 | |
Total Current Liabilities | (11,700) | 13,018 | |
Deferred credits and other long-term liabilities | (41,398) | 46,999 | |
Total Liabilities | (53,098) | 60,017 | |
Retained earnings | 236 | (145) | |
Total Stockholders' Equity | 236 | (145) | |
Total Liabilities and Stockholders' Equity | (52,862) | $ 59,872 | |
Accounting Standards Update 2016-02 | Balance Without ASC 842 Adoption | |||
Assets | |||
Other long-term assets | 54,569 | ||
Total Assets | 3,024,929 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Accrued liabilities | 249,280 | ||
Total Current Liabilities | 913,427 | ||
Deferred credits and other long-term liabilities | 35,084 | ||
Total Liabilities | 1,690,423 | ||
Retained earnings | 1,433,584 | ||
Total Stockholders' Equity | 1,334,506 | ||
Total Liabilities and Stockholders' Equity | $ 3,024,929 |
General - Recent Accounting Pro
General - Recent Accounting Pronouncements (Details) | Jun. 30, 2019 |
Accounting Standards Update 2016-13 | |
New accounting pronouncements disclosures | |
Change in Accounting Principle, Accounting Standards Update, Adopted | false |
Change in Accounting Principle, Accounting Standards Update, Early Adoption | false |
Accounting Standards Update 2017-04 | |
New accounting pronouncements disclosures | |
Change in Accounting Principle, Accounting Standards Update, Adopted | false |
Change in Accounting Principle, Accounting Standards Update, Early Adoption | false |
Accounting Standards Update 2018-15 | |
New accounting pronouncements disclosures | |
Change in Accounting Principle, Accounting Standards Update, Adopted | false |
Change in Accounting Principle, Accounting Standards Update, Early Adoption | false |
General - Revenue Recognition a
General - Revenue Recognition and ASU 2018-02 (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Operating results by business segment | ||||
Net revenue | $ 1,788,336 | $ 1,810,923 | $ 3,527,825 | $ 3,616,000 |
Transferred at a point in time | ||||
Operating results by business segment | ||||
Net revenue | 505,193 | 1,020,703 | ||
Transferred over time | ||||
Operating results by business segment | ||||
Net revenue | 1,283,143 | 2,507,122 | ||
PBM, including dispensing | ||||
Operating results by business segment | ||||
Net revenue | 435,350 | |||
Medicare Part D | ||||
Operating results by business segment | ||||
Net revenue | 69,843 | |||
PBA | ||||
Operating results by business segment | ||||
Net revenue | 33,476 | |||
Formulary management | ||||
Operating results by business segment | ||||
Net revenue | 18,426 | |||
Other service lines | ||||
Operating results by business segment | ||||
Net revenue | 419 | |||
Behavioral & Specialty Health | Risk-based, non-EAP | ||||
Operating results by business segment | ||||
Net revenue | 400,526 | 762,256 | ||
Behavioral & Specialty Health | EAP risk-based | ||||
Operating results by business segment | ||||
Net revenue | 87,296 | 176,913 | ||
Behavioral & Specialty Health | ASO | ||||
Operating results by business segment | ||||
Net revenue | 68,240 | 131,495 | ||
Magellan Complete Care | ||||
Operating results by business segment | ||||
Net revenue | 3,527,825 | |||
Magellan Complete Care | Risk-based, non-EAP | ||||
Operating results by business segment | ||||
Net revenue | 659,362 | 1,301,933 | ||
Magellan Complete Care | ASO | ||||
Operating results by business segment | ||||
Net revenue | 15,398 | 30,452 | ||
Magellan Complete Care | PBM, including dispensing | ||||
Operating results by business segment | ||||
Net revenue | 887,520 | |||
Magellan Complete Care | Medicare Part D | ||||
Operating results by business segment | ||||
Net revenue | 133,183 | |||
Magellan Complete Care | PBA | ||||
Operating results by business segment | ||||
Net revenue | 67,453 | |||
Magellan Complete Care | Formulary management | ||||
Operating results by business segment | ||||
Net revenue | 35,609 | |||
Magellan Complete Care | Other service lines | ||||
Operating results by business segment | ||||
Net revenue | 1,011 | |||
Government | ||||
Operating results by business segment | ||||
Net revenue | 1,084,347 | 2,200,888 | ||
Non-government | ||||
Operating results by business segment | ||||
Net revenue | 703,989 | 1,326,937 | ||
Healthcare | ||||
Operating results by business segment | ||||
Net revenue | 1,220,642 | 2,384,895 | ||
Healthcare | Transferred over time | ||||
Operating results by business segment | ||||
Net revenue | 1,220,642 | 2,384,895 | ||
Healthcare | Behavioral & Specialty Health | Risk-based, non-EAP | ||||
Operating results by business segment | ||||
Net revenue | 400,591 | 762,399 | ||
Healthcare | Behavioral & Specialty Health | EAP risk-based | ||||
Operating results by business segment | ||||
Net revenue | 87,296 | 176,913 | ||
Healthcare | Behavioral & Specialty Health | ASO | ||||
Operating results by business segment | ||||
Net revenue | 57,995 | 113,198 | ||
Healthcare | Magellan Complete Care | ||||
Operating results by business segment | ||||
Net revenue | 2,384,895 | |||
Healthcare | Magellan Complete Care | Risk-based, non-EAP | ||||
Operating results by business segment | ||||
Net revenue | 659,362 | 1,301,933 | ||
Healthcare | Magellan Complete Care | ASO | ||||
Operating results by business segment | ||||
Net revenue | 15,398 | 30,452 | ||
Healthcare | Government | ||||
Operating results by business segment | ||||
Net revenue | 910,543 | 1,799,036 | ||
Healthcare | Non-government | ||||
Operating results by business segment | ||||
Net revenue | 310,099 | 585,859 | ||
Pharmacy Management | ||||
Operating results by business segment | ||||
Net revenue | 612,658 | 1,229,118 | ||
Pharmacy Management | Transferred at a point in time | ||||
Operating results by business segment | ||||
Net revenue | 550,010 | 1,106,575 | ||
Pharmacy Management | Transferred over time | ||||
Operating results by business segment | ||||
Net revenue | 62,648 | 122,543 | ||
Pharmacy Management | PBM, including dispensing | ||||
Operating results by business segment | ||||
Net revenue | 480,167 | |||
Pharmacy Management | Medicare Part D | ||||
Operating results by business segment | ||||
Net revenue | 69,843 | |||
Pharmacy Management | PBA | ||||
Operating results by business segment | ||||
Net revenue | 33,476 | |||
Pharmacy Management | Formulary management | ||||
Operating results by business segment | ||||
Net revenue | 18,426 | |||
Pharmacy Management | Other service lines | ||||
Operating results by business segment | ||||
Net revenue | 419 | |||
Pharmacy Management | Behavioral & Specialty Health | ASO | ||||
Operating results by business segment | ||||
Net revenue | 10,327 | 18,470 | ||
Pharmacy Management | Magellan Complete Care | ||||
Operating results by business segment | ||||
Net revenue | 1,229,118 | |||
Pharmacy Management | Magellan Complete Care | PBM, including dispensing | ||||
Operating results by business segment | ||||
Net revenue | 973,392 | |||
Pharmacy Management | Magellan Complete Care | Medicare Part D | ||||
Operating results by business segment | ||||
Net revenue | 133,183 | |||
Pharmacy Management | Magellan Complete Care | PBA | ||||
Operating results by business segment | ||||
Net revenue | 67,453 | |||
Pharmacy Management | Magellan Complete Care | Formulary management | ||||
Operating results by business segment | ||||
Net revenue | 35,609 | |||
Pharmacy Management | Magellan Complete Care | Other service lines | ||||
Operating results by business segment | ||||
Net revenue | 1,011 | |||
Pharmacy Management | Government | ||||
Operating results by business segment | ||||
Net revenue | 173,804 | 401,852 | ||
Pharmacy Management | Non-government | ||||
Operating results by business segment | ||||
Net revenue | $ 438,854 | 827,266 | ||
Elimination | ||||
Operating results by business segment | ||||
Net revenue | (44,964) | (86,188) | ||
Elimination | Transferred at a point in time | ||||
Operating results by business segment | ||||
Net revenue | (44,817) | (85,872) | ||
Elimination | Transferred over time | ||||
Operating results by business segment | ||||
Net revenue | (147) | (316) | ||
Elimination | PBM, including dispensing | ||||
Operating results by business segment | ||||
Net revenue | (44,817) | |||
Elimination | Behavioral & Specialty Health | Risk-based, non-EAP | ||||
Operating results by business segment | ||||
Net revenue | (65) | (143) | ||
Elimination | Behavioral & Specialty Health | ASO | ||||
Operating results by business segment | ||||
Net revenue | (82) | (173) | ||
Elimination | Magellan Complete Care | ||||
Operating results by business segment | ||||
Net revenue | (86,188) | |||
Elimination | Magellan Complete Care | PBM, including dispensing | ||||
Operating results by business segment | ||||
Net revenue | (85,872) | |||
Elimination | Non-government | ||||
Operating results by business segment | ||||
Net revenue | $ (44,964) | $ (86,188) |
General - Per Member Per Month
General - Per Member Per Month Revenue (Details) - Minimum | 6 Months Ended |
Jun. 30, 2019 | |
Operating results by business segment | |
Term of PMPM contract | 1 year |
Required notice to terminate PMPM contract | 30 days |
General - Pharmacy Benefit Mana
General - Pharmacy Benefit Management Revenue (Details) | 6 Months Ended |
Jun. 30, 2019 | |
Minimum | |
Operating results by business segment | |
Expected term of PBM relationship | 1 year |
General - Pharmacy Benefit Admi
General - Pharmacy Benefit Administration Revenue (Details) | 6 Months Ended |
Jun. 30, 2019 | |
Minimum | |
Operating results by business segment | |
Anticipated period of benefit of the material right | 2 years |
Maximum | |
Operating results by business segment | |
Anticipated period of benefit of the material right | 10 years |
General - Formulary Management
General - Formulary Management Revenue (Details) | 6 Months Ended |
Jun. 30, 2019 | |
Minimum | |
Operating results by business segment | |
Term of formulary management contract | 1 year |
General - Accounts Receivable,
General - Accounts Receivable, Contract Assets and Contract Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | |
Operating results by business segment | |||
Accounts receivable | $ 854,715 | $ 854,715 | $ 786,395 |
Change in accounts receivable (in dollars) | $ 68,320 | ||
Change in accounts receivable (as a percent) | 8.70% | ||
Contract assets | 12,891 | $ 12,891 | 4,647 |
Change in contract assets (in dollars) | $ 8,244 | ||
Change in contract assets (as a percent) | 177.40% | ||
Contract liabilities - current | 7,809 | $ 7,809 | 16,853 |
Change in contract liabilities - current (in dollars) | $ (9,044) | ||
Change in contract liabilities - current (as a percent) | (53.70%) | ||
Contract liabilities - long-term | 12,187 | $ 12,187 | $ 13,441 |
Change in contract liabilities - long-term (in dollars) | $ (1,254) | ||
Change in contract liabilities - long-term (as a percent) | (9.30%) | ||
Revenue recognized previously included in current contract liabilities | $ 2,600 | $ 14,200 |
General - Estimated Timing of R
General - Estimated Timing of Recognition of Amounts Included in Contract Liabilities (Details) $ in Millions | Jun. 30, 2019USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 6 months |
Estimated revenue to be recognized | $ 5.9 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months |
Estimated revenue to be recognized | $ 3.6 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months |
Estimated revenue to be recognized | $ 3 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 7 years |
Estimated revenue to be recognized | $ 7.5 |
General - Customers Exceeding T
General - Customers Exceeding Ten Percent of Consolidated Net Revenues (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019USD ($)item | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)item | Jun. 30, 2018USD ($) | |
Operating results by business segment | ||||
Revenues | $ 1,788,336 | $ 1,810,923 | $ 3,527,825 | $ 3,616,000 |
Minimum | ||||
Operating results by business segment | ||||
Term of contracts with customers | 1 year | |||
Term of contract extensions or renewals | 1 year | |||
Maximum | ||||
Operating results by business segment | ||||
Term of contracts with customers | 3 years | |||
Term of contract extensions or renewals | 2 years | |||
Virginia Contracts | ||||
Operating results by business segment | ||||
Revenues | $ 391,200 | 228,800 | ||
CCC Plus Contract | ||||
Operating results by business segment | ||||
Term of contracts with customers | 5 years | |||
Term of contract extensions or renewals | 12 months | |||
Termination notice | 90 days | |||
CCC Plus Contract | Maximum | ||||
Operating results by business segment | ||||
Number of contract extensions or renewals | item | 5 | 5 | ||
Medallion Contract | ||||
Operating results by business segment | ||||
Number of contract extensions or renewals | item | 6 | 6 | ||
Term of contract extensions or renewals | 12 months | |||
Termination notice | 180 days | |||
New York Contract | ||||
Operating results by business segment | ||||
Revenues | $ 400,600 | 356,600 | ||
Massachusetts Contracts | ||||
Operating results by business segment | ||||
Revenues | $ 360,900 | 330,900 | ||
SCO Contract | ||||
Operating results by business segment | ||||
Term of contract extensions or renewals | 1 year | |||
Termination notice | 180 days | |||
SCO Contract | Maximum | ||||
Operating results by business segment | ||||
Number of contract extensions or renewals | item | 5 | 5 | ||
CMS Contract | ||||
Operating results by business segment | ||||
Term of contracts with customers | 1 year | |||
Healthcare | ||||
Operating results by business segment | ||||
Revenues | $ 1,220,642 | $ 2,384,895 | ||
Healthcare | Customer A | ||||
Operating results by business segment | ||||
Revenues | 118,061 | 307,902 | ||
Pharmacy Management | ||||
Operating results by business segment | ||||
Revenues | $ 612,658 | 1,229,118 | ||
Pharmacy Management | Customer B | ||||
Operating results by business segment | ||||
Revenues | $ 174,535 | $ 176,650 |
General - Concentration of Busi
General - Concentration of Business (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Operating results by business segment | |||||
Revenues | $ 1,788,336 | $ 1,810,923 | $ 3,527,825 | $ 3,616,000 | |
Accounts receivable, net | 810,431 | $ 810,431 | $ 756,059 | ||
Minimum | |||||
Operating results by business segment | |||||
Term of contracts with customers | 1 year | ||||
Term of contract extensions or renewals | 1 year | ||||
Notice period for termination of contract | 30 days | ||||
Maximum | |||||
Operating results by business segment | |||||
Term of contracts with customers | 3 years | ||||
Term of contract extensions or renewals | 2 years | ||||
Notice period for termination of contract | 180 days | ||||
Pennsylvania Counties | |||||
Operating results by business segment | |||||
Revenues | $ 271,400 | 275,300 | |||
CMS | |||||
Operating results by business segment | |||||
Revenues | 133,200 | 205,100 | |||
Accounts receivable, net | $ 131,700 | 131,700 | $ 131,000 | ||
United States federal government | |||||
Operating results by business segment | |||||
Revenues | $ 156,700 | $ 165,800 |
General - Components of Lease E
General - Components of Lease Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Components of leases expenses: | ||
Operating lease cost | $ 4,657 | $ 9,382 |
Amortization of right-of-use asset | 1,018 | 1,958 |
Interest on lease liabilities | 418 | 634 |
Total finance lease cost | 1,436 | 2,592 |
Short-term lease cost | 346 | 664 |
Variable lease cost | 690 | 1,564 |
Total lease cost | 7,129 | 14,202 |
Sublease income | (102) | (200) |
Net lease cost | $ 7,027 | $ 14,002 |
General - Lease Assets and Liab
General - Lease Assets and Liabilities and Maturity Dates of Leases (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Components of lease assets and liabilities: | |
Operating lease right-of-use assets | $ 52,862 |
Current operating lease liabilities | $ 13,334 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued Liabilities, Current |
Long-term operating lease liabilities | $ 47,773 |
Total operating lease liabilities | 61,107 |
Finance lease assets | $ 14,670 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Property, Plant and Equipment, Net |
Current finance lease liabilities | $ 4,250 |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] | Long-term Debt and Capital Lease Obligations, Current |
Long-term finance lease liabilities | $ 15,846 |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Long-term Debt and Capital Lease Obligations |
Total finance lease liabilities | $ 20,096 |
Maturity dates of leases: | |
2019 | 9,446 |
2020 | 17,034 |
2021 | 16,423 |
2022 | 15,403 |
2023 | 11,426 |
2024 and beyond | 13,758 |
Total lease payments | 83,490 |
Less interest | (2,287) |
Present value of lease liabilities | $ 81,203 |
Weighted average remaining lease term | |
Operating leases | 4 years 8 months 12 days |
Finance leases | 5 years 1 month 20 days |
Weighted average discount rate | |
Operating leases | 4.79% |
Finance leases | 4.52% |
General - Supplemental Cash Flo
General - Supplemental Cash Flow Information Relating to Leases (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Lessee, Lease, Description [Line Items] | |
Operating cash flows from operating leases | $ 8,852 |
Operating cash flows from finance leases | 2,068 |
Financing cash flows from finance leases | 427 |
Right-of-use asset obtained in exchange for new lease obligation | |
Operating leases | $ 937 |
General - Fair Value Measuremen
General - Fair Value Measurements (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Assets | ||
Investments | $ 394,519 | $ 385,743 |
Cash held in bank accounts | 4,300 | 8,800 |
Liabilities | ||
Contingent consideration | 119 | 10,124 |
U.S. Government and agency securities | ||
Assets | ||
Investments | 110,361 | 67,815 |
Obligations of government-sponsored enterprises | ||
Assets | ||
Investments | 1,501 | 5,229 |
Corporate debt securities | ||
Assets | ||
Investments | 257,507 | 292,049 |
Certificates of deposit | ||
Assets | ||
Investments | 25,150 | 20,650 |
Level 1 | 4.400% Senior Notes due 2024 | ||
Liabilities | ||
Fair value of debt | 399,000 | |
Level 2 | 2017 Credit Agreement, senior unsecured term loan facility | ||
Liabilities | ||
Fair value of debt | 319,400 | |
Fair value measured on recurring basis | ||
Assets | ||
Total assets held at fair value | 650,602 | 649,205 |
Liabilities | ||
Contingent consideration | 119 | 10,124 |
Total liabilities held at fair value | 119 | 10,124 |
Fair value measured on recurring basis | Other than cash held in bank accounts by Company | ||
Assets | ||
Cash and cash equivalents | 256,083 | 263,462 |
Fair value measured on recurring basis | U.S. Government and agency securities | ||
Assets | ||
Investments | 110,361 | 67,815 |
Fair value measured on recurring basis | Obligations of government-sponsored enterprises | ||
Assets | ||
Investments | 1,501 | 5,229 |
Fair value measured on recurring basis | Corporate debt securities | ||
Assets | ||
Investments | 257,507 | 292,049 |
Fair value measured on recurring basis | Certificates of deposit | ||
Assets | ||
Investments | 25,150 | 20,650 |
Fair value measured on recurring basis | Level 1 | ||
Assets | ||
Total assets held at fair value | 110,361 | 67,815 |
Fair value measured on recurring basis | Level 1 | U.S. Government and agency securities | ||
Assets | ||
Investments | 110,361 | 67,815 |
Fair value measured on recurring basis | Level 2 | ||
Assets | ||
Total assets held at fair value | 540,241 | 581,390 |
Fair value measured on recurring basis | Level 2 | Other than cash held in bank accounts by Company | ||
Assets | ||
Cash and cash equivalents | 256,083 | 263,462 |
Fair value measured on recurring basis | Level 2 | Obligations of government-sponsored enterprises | ||
Assets | ||
Investments | 1,501 | 5,229 |
Fair value measured on recurring basis | Level 2 | Corporate debt securities | ||
Assets | ||
Investments | 257,507 | 292,049 |
Fair value measured on recurring basis | Level 2 | Certificates of deposit | ||
Assets | ||
Investments | 25,150 | 20,650 |
Fair value measured on recurring basis | Level 3 | ||
Liabilities | ||
Contingent consideration | 119 | 10,124 |
Total liabilities held at fair value | $ 119 | $ 10,124 |
General - Contingent Considerat
General - Contingent Consideration (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2020 | Dec. 31, 2018 | |
Fair value measurement of contingent consideration | ||||||
Estimated undiscounted future contingent payments | $ 100 | $ 100 | $ 10,600 | |||
Fair value of short-term contingent consideration | 119 | 119 | 8,000 | |||
Fair value of long-term contingent consideration | $ 2,124 | |||||
Liability for contingent consideration | ||||||
Balance as of beginning of period | 10,124 | |||||
Changes in fair value | (2,149) | $ 70 | (2,005) | $ 303 | ||
Payments | (8,000) | |||||
Balance as of end of period | $ 119 | $ 119 | ||||
Forecast | ||||||
Fair value measurement of contingent consideration | ||||||
Estimated undiscounted future contingent payments | $ 100 |
General - Cash And Cash Equival
General - Cash And Cash Equivalents (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Cash and Cash Equivalents | ||
Excess capital and undistributed earnings for regulated subsidiaries included in cash and cash equivalents | $ 73 | |
Bank overdrafts | $ 3.9 | $ 0 |
General - Investments (Details)
General - Investments (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Short-term and long-term investments | |||
Bank overdrafts | $ 3,900 | $ 0 | |
Realized gains or losses | 0 | $ 0 | |
Amortized Cost | 393,974 | 386,169 | |
Gross Unrealized Gains | 554 | 23 | |
Gross Unrealized Losses | (9) | (449) | |
Estimated Fair Value | 394,519 | 385,743 | |
U.S. Government and agency securities | |||
Short-term and long-term investments | |||
Amortized Cost | 110,209 | 67,870 | |
Gross Unrealized Gains | 158 | 17 | |
Gross Unrealized Losses | (6) | (72) | |
Estimated Fair Value | 110,361 | 67,815 | |
Obligations of government-sponsored enterprises | |||
Short-term and long-term investments | |||
Amortized Cost | 1,503 | 5,257 | |
Gross Unrealized Losses | (2) | (28) | |
Estimated Fair Value | 1,501 | 5,229 | |
Corporate debt securities | |||
Short-term and long-term investments | |||
Amortized Cost | 257,112 | 292,392 | |
Gross Unrealized Gains | 396 | 6 | |
Gross Unrealized Losses | (1) | (349) | |
Estimated Fair Value | 257,507 | 292,049 | |
Certificates of deposit | |||
Short-term and long-term investments | |||
Amortized Cost | 25,150 | 20,650 | |
Estimated Fair Value | $ 25,150 | $ 20,650 |
General - Investments by Maturi
General - Investments by Maturity Date (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Amortized Cost | ||
Investments amortized cost maturity dates 2019 | $ 226,389 | |
Investments amortized cost maturity dates 2020 | 167,071 | |
Investments amortized cost maturity dates 2021 | 514 | |
Amortized Cost | 393,974 | $ 386,169 |
Estimated Fair Value | ||
Investments fair value maturity dates 2019 | 226,537 | |
Investments fair value maturity dates 2020 | 167,464 | |
Investments fair value maturity dates 2021 | 518 | |
Estimated Fair Value | $ 394,519 | $ 385,743 |
General - Income Taxes (Details
General - Income Taxes (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Sep. 30, 2018 | |
Income Taxes | |||
Effective income tax rates (as a percent) | 36.70% | 16.00% | |
Taxes paid in resolution of examination | $ 0.3 | ||
Deferred Tax Assets, Valuation Allowance | $ 1.5 | ||
Federal | |||
Income Taxes | |||
Operating Loss Carryforwards | 27.7 | ||
State | |||
Income Taxes | |||
Operating Loss Carryforwards | 88.2 | ||
AlphaCare | Federal | |||
Income Taxes | |||
Operating Loss Carryforwards | $ 27.1 |
General - Health Care Reform (D
General - Health Care Reform (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($) | |
HIF fees | $ 29.9 |
General - Stock Compensation -
General - Stock Compensation - Stock Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Stock Compensation | ||||
Stock compensation expense | $ 5,414 | $ 10,439 | $ 15,021 | $ 18,085 |
Minimum | ||||
Stock Compensation | ||||
Estimated forfeitures (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% |
Maximum | ||||
Stock Compensation | ||||
Estimated forfeitures (as a percent) | 4.00% | 4.00% | 4.00% | 4.00% |
General - Stock Compensation _2
General - Stock Compensation - Options - Fair Value Assumptions (Details) | 6 Months Ended |
Jun. 30, 2019$ / shares | |
Fair Value Assumptions | |
Grants in period, weighted average grant date fair value (in dollars per share) | $ 20.62 |
Stock options | |
Fair Value Assumptions | |
Expected volatility (as a percent) | 35.07% |
General - Stock Compensation _3
General - Stock Compensation - Additional Disclosures (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Stock Compensation | ||
Benefits of tax deductions (tax on deficiencies) in excess of recognized stock compensation expense | $ (1.6) | $ 4.9 |
General - Stock Compensation _4
General - Stock Compensation - Options - Activity (Details) - $ / shares | 6 Months Ended |
Jun. 30, 2019 | |
Options | |
Outstanding, beginning of period (in shares) | 2,352,609 |
Granted (in shares) | 412,624 |
Forfeited (in shares) | (43,672) |
Exercised (in shares) | (389,268) |
Outstanding, end of period (in shares) | 2,332,293 |
Weighted Average Exercise Price | |
Outstanding, beginning of period (in dollars per share) | $ 68.10 |
Granted (in dollars per share) | 66.06 |
Forfeited (in dollars per share) | 82.28 |
Exercised (in dollars per share) | 60.31 |
Outstanding, end of period (in dollars per share) | $ 68.77 |
Vested and Expected to Vest | |
Vested and expected to vest end of period (in shares) | 2,313,024 |
Vested and expected to vest end of period (in dollars per share) | $ 68.74 |
Exercisable, end of period (in shares) | 1,498,260 |
Exercisable, end of period (in dollars per share) | $ 64.40 |
General - Stock Compensation _5
General - Stock Compensation - Options - Additional Information (Details) - Stock options | 6 Months Ended |
Jun. 30, 2019 | |
Stock Compensation | |
Vesting period | 3 years |
Life of options (expiration period) | 10 years |
General - Stock Compensation _6
General - Stock Compensation - Nonvested - Activity (Details) | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Restricted stock awards | |
Shares | |
Outstanding, beginning of period (in shares) | shares | 11,795 |
Awarded (in shares) | shares | 20,152 |
Vested (in shares) | shares | (13,939) |
Outstanding, end of period (in shares) | shares | 18,008 |
Weighted Average Grant Date Fair Value | |
Outstanding, beginning of period (in dollars per share) | $ / shares | $ 89.05 |
Awarded (in dollars per share) | $ / shares | 66.93 |
Vested (in dollars per share) | $ / shares | 85.99 |
Outstanding, end of period (in dollars per share) | $ / shares | $ 66.66 |
Restricted Stock Units (RSUs) | |
Shares | |
Outstanding, beginning of period (in shares) | shares | 156,750 |
Awarded (in shares) | shares | 186,325 |
Vested (in shares) | shares | (68,993) |
Forfeited (in shares) | shares | (14,288) |
Outstanding, end of period (in shares) | shares | 259,794 |
Weighted Average Grant Date Fair Value | |
Outstanding, beginning of period (in dollars per share) | $ / shares | $ 86.68 |
Awarded (in dollars per share) | $ / shares | 66.57 |
Vested (in dollars per share) | $ / shares | 81.95 |
Forfeited (in dollars per share) | $ / shares | 82.76 |
Outstanding, end of period (in dollars per share) | $ / shares | $ 73.73 |
Performance Based Restricted Stock Units ("PSUs") | |
Shares | |
Outstanding, beginning of period (in shares) | shares | 209,019 |
Awarded (in shares) | shares | 83,087 |
Vested (in shares) | shares | (43,109) |
Forfeited (in shares) | shares | (12,157) |
Outstanding, end of period (in shares) | shares | 236,840 |
Weighted Average Grant Date Fair Value | |
Outstanding, beginning of period (in dollars per share) | $ / shares | $ 103.38 |
Awarded (in dollars per share) | $ / shares | 100.31 |
Vested (in dollars per share) | $ / shares | 97.12 |
Forfeited (in dollars per share) | $ / shares | 97.12 |
Outstanding, end of period (in dollars per share) | $ / shares | $ 103.76 |
General - Stock Compensation _7
General - Stock Compensation - Restricted Stock Units (Details) | 6 Months Ended |
Jun. 30, 2019 | |
Restricted Stock Units (RSUs) | |
Stock Compensation | |
Vesting period | 3 years |
General - Stock Compensation _8
General - Stock Compensation - Performance Stock Units (Details) - Performance Based Restricted Stock Units ("PSUs") | 6 Months Ended |
Jun. 30, 2019Dcompany$ / shares | |
Fair Value Assumptions | |
Weighted average estimated fair value of the PSUs granted (in dollars per share) | $ / shares | $ 100.31 |
Expected dividend yield (as a percent) | 0.00% |
Risk-free interest rate (as a percent) | 2.51% |
Performance period | 3 years |
Expected volatility, minimum (as a percent) | 19.00% |
Expected volatility, maximum (as a percent) | 82.00% |
Expected volatility, average (as a percent) | 36.00% |
Number of trading days considered for average share value | D | 30 |
Number of companies in peer group | company | 48 |
Minimum | |
Fair Value Assumptions | |
Shares to be settled (as a percent) | 0.00% |
Maximum | |
Fair Value Assumptions | |
Shares to be settled (as a percent) | 200.00% |
General - Long Term Debt and Fi
General - Long Term Debt and Finance Lease Obligation - Senior Notes (Details) - Senior Notes - 4.400% Senior Notes due 2024 - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2019 | Dec. 31, 2018 | Sep. 22, 2017 | |
Debt | |||
Debt instrument, face amount | $ 400 | ||
Stated interest rate (as a percent) | 4.40% | ||
Long-term debt | $ 399.3 | $ 399.3 | |
Debt instrument, maturity date | Sep. 22, 2024 | ||
Redemption price of the principal amount redeemed (as a percent) | 100.00% |
General - Long Term Debt and _2
General - Long Term Debt and Finance Lease Obligation - Credit Agreement - General Information (Details) - Unsecured Debt - USD ($) $ in Millions | Aug. 13, 2018 | Aug. 12, 2018 | Sep. 22, 2017 | Jun. 30, 2019 |
2017 Credit Agreement | ||||
Debt | ||||
Debt instrument, maturity date | Sep. 22, 2023 | Sep. 22, 2022 | Sep. 22, 2022 | Sep. 22, 2023 |
2017 Credit Agreement, senior unsecured revolving credit facility | ||||
Debt | ||||
Maximum borrowing capacity | $ 400 | |||
Commitment commission (as a percent) | 0.20% | |||
Weighted average interest rate (as a percent) | 4.2875% | |||
2017 Credit Agreement, senior unsecured term loan facility | ||||
Debt | ||||
Maximum borrowing capacity | $ 350 | |||
2017 Credit Agreement, senior unsecured term loan facility | Prime rate | ||||
Debt | ||||
Basis spread on variable rate (as a percent) | 0.50% | |||
2017 Credit Agreement, senior unsecured term loan facility | Federal Funds Rate | ||||
Debt | ||||
Basis spread on variable rate (as a percent) | 0.50% | |||
2017 Credit Agreement, senior unsecured term loan facility | Eurodollar rate for one month | ||||
Debt | ||||
Basis spread on variable rate (as a percent) | 1.00% | |||
2017 Credit Agreement, senior unsecured term loan facility | Eurodollar rate for selected interest period | ||||
Debt | ||||
Basis spread on variable rate (as a percent) | 1.50% |
General - Long Term Debt and _3
General - Long Term Debt and Finance Lease Obligation - Credit Agreement - Contractual Maturities (Details) - Unsecured Debt - 2017 Credit Agreement, senior unsecured term loan facility $ in Millions | Jun. 30, 2019USD ($) |
Long-term Debt, Fiscal Year Maturity | |
2019 | $ 8.8 |
2020 | 17.5 |
2021 | 17.5 |
2022 | 17.5 |
2023 | $ 258.1 |
General - Long Term Debt and _4
General - Long Term Debt and Finance Lease Obligation - Credit Agreement - Additional Information (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Debt | ||
Deferred loan issuance cost | $ 6.5 | $ 5.9 |
Unsecured Debt | 2017 Credit Agreement, senior unsecured revolving credit facility | ||
Debt | ||
Revolving borrowings outstanding | 0 | |
Available borrowing capacity | $ 400 |
General - Long Term Debt and _5
General - Long Term Debt and Finance Lease Obligation - Letter of Credit Agreement (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
General | ||
Letters of credit outstanding | $ 66.4 | $ 66.1 |
General - Long Term Debt and _6
General - Long Term Debt and Finance Lease Obligation - Finance Lease (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Finance Lease | ||
Finance lease liability | $ 20,096 | |
Deferred financing obligations | 1,300 | $ 9,500 |
Gross cost of finance leased assets | $ 55,700 |
General - Long Term Debt and _7
General - Long Term Debt and Finance Lease Obligation - Deferred Financing Obligations (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Capital Lease Obligations | ||
Capital lease obligations | $ 21.7 | |
Deferred financing obligations | $ 1.3 | 9.5 |
Gross Cost of Finance Lease Assets | ||
Gross cost of finance leased assets | $ 51.9 |
Net Income per Common Share A_3
Net Income per Common Share Attributable to Magellan Health, Inc (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Numerator: | ||||
Net income | $ 13,613 | $ 13,551 | $ 14,044 | $ 25,003 |
Denominator: | ||||
Weighted average number of common shares outstanding-basic (in shares) | 24,101 | 24,569 | 24,024 | 24,460 |
Common stock equivalents-stock options (in shares) | 153 | 669 | 132 | 738 |
Common stock equivalents-RSAs (in shares) | 7 | 33 | 7 | 28 |
Common stock equivalents-RSUs (in shares) | 18 | 23 | 19 | 50 |
Common stock equivalents- PSUs( in shares) | 130 | 111 | 127 | 232 |
Common stock equivalents-employee stock purchase plan (in shares) | 7 | 2 | 6 | 2 |
Weighted average number of common shares outstanding-diluted (in shares) | 24,416 | 25,407 | 24,315 | 25,510 |
Net income per common share-basic (in dollars per share) | $ 0.56 | $ 0.55 | $ 0.58 | $ 1.02 |
Net income per common share-diluted (in dollars per share) | $ 0.56 | $ 0.53 | $ 0.58 | $ 0.98 |
Potential dilutive securities excluded from computation of dilutive securities (in shares) | 1,100 | 500 | 1,100 | 300 |
Business Segment Information -
Business Segment Information - Operating Results by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Operating results by business segment | ||||
Net revenue | $ 1,788,336 | $ 1,810,923 | $ 3,527,825 | $ 3,616,000 |
Cost of care | (1,001,886) | (935,814) | (1,943,847) | (1,864,475) |
Cost of goods sold | (461,187) | (558,419) | (950,980) | (1,118,084) |
Direct service costs and other | (266,434) | (259,152) | (538,358) | (528,229) |
Stock compensation expense | 5,414 | 10,439 | 15,021 | 18,085 |
Changes in fair value of contingent consideration | (2,149) | 70 | (2,005) | 303 |
Segment Profit (Loss) | 62,094 | 68,047 | 107,656 | 123,600 |
Managed care and other | ||||
Operating results by business segment | ||||
Net revenue | 1,283,143 | 1,215,340 | 2,507,122 | 2,435,103 |
PBM | ||||
Operating results by business segment | ||||
Net revenue | 505,193 | 595,583 | 1,020,703 | 1,180,897 |
Healthcare | ||||
Operating results by business segment | ||||
Net revenue | 1,220,642 | 2,384,895 | ||
Pharmacy Management | ||||
Operating results by business segment | ||||
Net revenue | 612,658 | 1,229,118 | ||
Operating segments | Healthcare | ||||
Operating results by business segment | ||||
Cost of care | (1,001,886) | (935,814) | (1,943,847) | (1,864,475) |
Direct service costs and other | (177,948) | (177,990) | (357,138) | (364,236) |
Stock compensation expense | 2,444 | 2,742 | 4,194 | 5,692 |
Changes in fair value of contingent consideration | (2,149) | 70 | (2,005) | 303 |
Segment Profit (Loss) | 41,103 | 43,896 | 86,099 | 89,773 |
Operating segments | Healthcare | Managed care and other | ||||
Operating results by business segment | ||||
Net revenue | 1,220,642 | 1,154,888 | 2,384,895 | 2,312,489 |
Operating segments | Pharmacy Management | ||||
Operating results by business segment | ||||
Cost of goods sold | (505,203) | (603,951) | (1,035,410) | (1,208,864) |
Direct service costs and other | (78,776) | (70,941) | (158,411) | (146,527) |
Stock compensation expense | 2,124 | 1,408 | 3,796 | 2,893 |
Segment Profit (Loss) | 30,803 | 29,913 | 39,093 | 45,404 |
Operating segments | Pharmacy Management | Managed care and other | ||||
Operating results by business segment | ||||
Net revenue | 62,648 | 60,603 | 122,543 | 122,910 |
Operating segments | Pharmacy Management | PBM | ||||
Operating results by business segment | ||||
Net revenue | 550,010 | 642,794 | 1,106,575 | 1,274,992 |
Corporate and Elimination | ||||
Operating results by business segment | ||||
Cost of goods sold | 44,016 | 45,532 | 84,430 | 90,780 |
Direct service costs and other | (9,710) | (10,221) | (22,809) | (17,466) |
Stock compensation expense | 846 | 6,289 | 7,031 | 9,500 |
Segment Profit (Loss) | (9,812) | (5,762) | (17,536) | (11,577) |
Corporate and Elimination | Managed care and other | ||||
Operating results by business segment | ||||
Net revenue | (147) | (151) | (316) | (296) |
Corporate and Elimination | PBM | ||||
Operating results by business segment | ||||
Net revenue | $ (44,817) | $ (47,211) | $ (85,872) | $ (94,095) |
Business Segment Information _2
Business Segment Information - Reconciliation of Segment Profit to Income Before Taxes (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Reconciliation of segment profit to income before income taxes | ||||
Income before income taxes | $ 21,219 | $ 18,375 | $ 22,189 | $ 29,752 |
Stock compensation expense | 5,414 | 10,439 | 15,021 | 18,085 |
Changes in fair value of contingent consideration | (2,149) | 70 | (2,005) | 303 |
Depreciation and amortization | 33,490 | 33,848 | 64,198 | 64,255 |
Interest expense | 9,141 | 8,678 | 18,248 | 17,044 |
Interest and other income | (5,021) | (3,363) | (9,995) | (5,839) |
Segment Profit | $ 62,094 | $ 68,047 | $ 107,656 | $ 123,600 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) $ / shares in Units, $ in Millions | May 24, 2018 | Jul. 26, 2019 | Dec. 31, 2015 | Jun. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2019 | Mar. 31, 2019 | Oct. 26, 2015 |
Commitments and Contingencies | ||||||||||
Percentage of total net revenues generated by AFSC | 2.00% | 2.00% | ||||||||
Maximum | Pharmacy Management segment network provider pricing dispute | ||||||||||
Commitments and Contingencies | ||||||||||
Estimate of possible loss | $ 20 | $ 20 | ||||||||
Minimum | Pharmacy Management segment network provider pricing dispute | ||||||||||
Commitments and Contingencies | ||||||||||
Estimate of possible loss | $ 0 | $ 0 | ||||||||
October 2015 Share Repurchase Program | ||||||||||
Commitments and Contingencies | ||||||||||
Amount authorized under stock repurchase plan | $ 400 | $ 200 | ||||||||
Increase in amount authorized under stock repurchase plan | $ 200 | |||||||||
Share repurchases made in open market (in shares) | 0 | 345,044 | 60,901 | 844,872 | 280,140 | 1,828,183 | 3,359,140 | |||
Average Price Paid per Share (in dollars per share) | $ 53.46 | $ 61.15 | $ 74.59 | $ 77.67 | $ 58.40 | |||||
Aggregate Cost | $ 18.4 | $ 3.7 | $ 63 | $ 21.8 | $ 106.8 | $ 213.7 | ||||
Remaining authorized repurchase amount | $ 186.3 |