Magellan Health, Inc. MGLN expects to deliver operating net earnings between $3.06 and $3.83 per share in 2016. The Zacks Consensus Estimate for the same is currently pegged lower at $1.38. We expect the analysts to raise their estimates following the company’s projection. Operating net earnings are estimated at $75.5 million to $94.5 million. Shares gained more than 8% in yesterday’s trading session, reflecting an optimistic outlook for 2016.
Accounting for one-time items, net income is projected in the range of $50 million to $70 million or $2.06 to $2.83 per share.
The company estimates revenues between $4.28 billion and $4.52 billion. The Zacks Consensus Estimate of $4.6 billion currently stands above the company’s guidance. Magellan Health guided segment profit in the range of $260 million to $280 million, riding on the strength of pharmacy business, better performance at Magellan Complete Care of Florida, and growing commercial healthcare business.
Magellan Health exhausted the earlier $200 million share repurchase authorization in the third quarter and is presently executing the new $200 million program approved in October. Under the current authorization, the company had spent t $18.4 million to buy back 0.345 million shares. At Dec 31, 2016, shares outstanding are expected to be 24.7 million.
For 2016, Magellan Health projects cash flow from operations between $193 million and $224 million.
Magellan Health believes that it will remain well poised for growth on the back of solid results from its Pharmacy and Healthcare business. The expected long-term earnings growth is currently pegged at 20%.
Concurrently, Magellan Health reiterated the expectation for 2015. Adjusted net income of $73 million to $86 million or $2.82 and $3.32 per share accounts for care pressures in government healthcare contracts, and lower rates in Florida, though strong performing Pharmacy business will limit the downside. Magellan Health guided net income of $11 million to $24 million or $0.42 and $0.93 for 2015 based on 25.9 million shares outstanding. Cash flow from operations in 2015 is projected between $155 million and $175 million. The Zacks Consensus Estimate for 2015 is pegged at 69 cents, translating to a year-over-year decrease of 79.6%.
Zacks Ranks
Magellan Health presently carries a Zacks Rank #4 (Sell). Some better-ranked health, maintenance organizations worth considering are UnitedHealth Group Inc UNH, Centene Corp. CNC and Molina Healthcare, Inc. MOH. While UnitedHealth Group sports a Zacks Rank #1 (Strong Buy), Centene Corp. and Molina Healthcare carry a Zacks Rank #2 (Buy).
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