002022-09-222022-09-220000019411--12-312020Q2falseP2YP9MP12MP12MP0MP5YP1YP1YP1Yus-gaap:OtherAssetsNoncurrentus-gaap:AccruedLiabilitiesCurrentus-gaap:DeferredCreditsAndOtherLiabilitiesNoncurrentus-gaap:AccruedLiabilitiesCurrent us-gaap:DeferredCreditsAndOtherLiabilitiesNoncurrentus-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortizationus-gaap:LongTermDebtAndCapitalLeaseObligationsCurrentus-gaap:LongTermDebtAndCapitalLeaseObligationsmgln:PharmacyManagementMember0.0050000019411us-gaap:TreasuryStockCommonMember2019-01-012019-06-300000019411mgln:ShareRepurchaseProgramOctober2015Member2020-06-300000019411mgln:ShareRepurchaseProgramOctober2015Member2018-05-240000019411mgln:ShareRepurchaseProgramOctober2015Member2015-10-260000019411us-gaap:CommonStockMember2020-04-012020-06-300000019411us-gaap:CommonStockMember2020-01-012020-06-300000019411us-gaap:CommonStockMember2019-04-012019-06-300000019411us-gaap:CommonStockMember2019-01-012019-06-300000019411srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2020-06-300000019411us-gaap:RetainedEarningsMember2020-06-300000019411us-gaap:AdditionalPaidInCapitalMember2020-06-300000019411us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300000019411srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2020-06-300000019411us-gaap:RetainedEarningsMember2020-03-310000019411us-gaap:AdditionalPaidInCapitalMember2020-03-310000019411us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-3100000194112020-03-310000019411us-gaap:RetainedEarningsMember2019-12-310000019411us-gaap:AdditionalPaidInCapitalMember2019-12-310000019411us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310000019411srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2019-06-300000019411us-gaap:RetainedEarningsMember2019-06-300000019411us-gaap:AdditionalPaidInCapitalMember2019-06-300000019411us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-300000019411srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-06-300000019411us-gaap:RetainedEarningsMember2019-03-310000019411us-gaap:AdditionalPaidInCapitalMember2019-03-310000019411us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-03-3100000194112019-03-310000019411us-gaap:RetainedEarningsMember2018-12-310000019411us-gaap:AdditionalPaidInCapitalMember2018-12-310000019411us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310000019411us-gaap:RestrictedStockUnitsRSUMember2020-06-300000019411us-gaap:RestrictedStockMember2020-06-300000019411us-gaap:RestrictedStockUnitsRSUMember2019-12-310000019411us-gaap:RestrictedStockMember2019-12-310000019411us-gaap:PerformanceSharesMember2019-12-310000019411us-gaap:RestrictedStockMember2020-01-012020-06-300000019411us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-06-300000019411us-gaap:EmployeeStockOptionMember2020-01-012020-06-3000000194112023-01-012020-06-3000000194112022-01-012020-06-3000000194112021-01-012020-06-3000000194112020-04-012020-06-300000019411us-gaap:OperatingSegmentsMembermgln:PharmacyBenefitManagementMembermgln:PharmacyManagementMember2020-04-012020-06-300000019411us-gaap:OperatingSegmentsMembermgln:ManagedCareAndOtherMembermgln:PharmacyManagementMember2020-04-012020-06-300000019411us-gaap:OperatingSegmentsMembermgln:ManagedCareAndOtherMembermgln:HealthcareSegmentMember2020-04-012020-06-300000019411srt:ConsolidationEliminationsMemberus-gaap:TransferredOverTimeMember2020-04-012020-06-300000019411srt:ConsolidationEliminationsMemberus-gaap:TransferredAtPointInTimeMember2020-04-012020-06-300000019411srt:ConsolidationEliminationsMembermgln:PbmIncludingDispensingMember2020-04-012020-06-300000019411srt:ConsolidationEliminationsMembermgln:NonGovernmentMember2020-04-012020-06-300000019411srt:ConsolidationEliminationsMembermgln:BehavioralAndSpecialtyHealthRiskBasedNonEmployeeAssistanceProgramsMember2020-04-012020-06-300000019411srt:ConsolidationEliminationsMembermgln:BehavioralAndSpecialtyHealthAdministrativeServicesOnlyMember2020-04-012020-06-300000019411mgln:PharmacyManagementMemberus-gaap:TransferredOverTimeMember2020-04-012020-06-300000019411mgln:PharmacyManagementMemberus-gaap:TransferredAtPointInTimeMember2020-04-012020-06-300000019411mgln:PharmacyBenefitAdministrationMembermgln:PharmacyManagementMember2020-04-012020-06-300000019411mgln:PbmIncludingDispensingMembermgln:PharmacyManagementMember2020-04-012020-06-300000019411mgln:OtherServiceLinesMembermgln:PharmacyManagementMember2020-04-012020-06-300000019411mgln:NonGovernmentMembermgln:PharmacyManagementMember2020-04-012020-06-300000019411mgln:NonGovernmentMembermgln:HealthcareSegmentMember2020-04-012020-06-300000019411mgln:MedicarePartDMembermgln:PharmacyManagementMember2020-04-012020-06-300000019411mgln:HealthcareSegmentMemberus-gaap:TransferredOverTimeMember2020-04-012020-06-300000019411mgln:GovernmentCustomerMembermgln:PharmacyManagementMember2020-04-012020-06-300000019411mgln:GovernmentCustomerMembermgln:HealthcareSegmentMember2020-04-012020-06-300000019411mgln:FormularyManagementMembermgln:PharmacyManagementMember2020-04-012020-06-300000019411mgln:CorporateAndEliminationsMembermgln:PharmacyBenefitManagementMember2020-04-012020-06-300000019411mgln:CorporateAndEliminationsMembermgln:ManagedCareAndOtherMember2020-04-012020-06-300000019411mgln:BehavioralAndSpecialtyHealthRiskBasedNonEmployeeAssistanceProgramsMembermgln:HealthcareSegmentMember2020-04-012020-06-300000019411mgln:BehavioralAndSpecialtyHealthEmployeeAssistanceProgramsRiskBasedMembermgln:HealthcareSegmentMember2020-04-012020-06-300000019411mgln:BehavioralAndSpecialtyHealthAdministrativeServicesOnlyMembermgln:PharmacyManagementMember2020-04-012020-06-300000019411mgln:BehavioralAndSpecialtyHealthAdministrativeServicesOnlyMembermgln:HealthcareSegmentMember2020-04-012020-06-300000019411us-gaap:TransferredOverTimeMember2020-04-012020-06-300000019411us-gaap:TransferredAtPointInTimeMember2020-04-012020-06-300000019411srt:ConsolidationEliminationsMember2020-04-012020-06-300000019411mgln:PharmacyManagementMember2020-04-012020-06-300000019411mgln:PharmacyBenefitManagementMember2020-04-012020-06-300000019411mgln:PharmacyBenefitAdministrationMember2020-04-012020-06-300000019411mgln:PbmIncludingDispensingMember2020-04-012020-06-300000019411mgln:OtherServiceLinesMember2020-04-012020-06-300000019411mgln:NonGovernmentMember2020-04-012020-06-300000019411mgln:MedicarePartDMember2020-04-012020-06-300000019411mgln:ManagedCareAndOtherMember2020-04-012020-06-300000019411mgln:GovernmentCustomerMember2020-04-012020-06-300000019411mgln:FormularyManagementMember2020-04-012020-06-300000019411mgln:BehavioralAndSpecialtyHealthRiskBasedNonEmployeeAssistanceProgramsMember2020-04-012020-06-300000019411mgln:BehavioralAndSpecialtyHealthEmployeeAssistanceProgramsRiskBasedMember2020-04-012020-06-300000019411mgln:BehavioralAndSpecialtyHealthAdministrativeServicesOnlyMember2020-04-012020-06-300000019411us-gaap:OperatingSegmentsMembermgln:PharmacyBenefitManagementMembermgln:PharmacyManagementMember2020-01-012020-06-300000019411us-gaap:OperatingSegmentsMembermgln:ManagedCareAndOtherMembermgln:PharmacyManagementMember2020-01-012020-06-300000019411us-gaap:OperatingSegmentsMembermgln:ManagedCareAndOtherMembermgln:HealthcareSegmentMember2020-01-012020-06-300000019411srt:ConsolidationEliminationsMemberus-gaap:TransferredOverTimeMember2020-01-012020-06-300000019411srt:ConsolidationEliminationsMemberus-gaap:TransferredAtPointInTimeMember2020-01-012020-06-300000019411srt:ConsolidationEliminationsMembermgln:PbmIncludingDispensingMember2020-01-012020-06-300000019411srt:ConsolidationEliminationsMembermgln:NonGovernmentMember2020-01-012020-06-300000019411srt:ConsolidationEliminationsMembermgln:BehavioralAndSpecialtyHealthRiskBasedNonEmployeeAssistanceProgramsMember2020-01-012020-06-300000019411srt:ConsolidationEliminationsMembermgln:BehavioralAndSpecialtyHealthAdministrativeServicesOnlyMember2020-01-012020-06-300000019411mgln:PharmacyManagementMemberus-gaap:TransferredOverTimeMember2020-01-012020-06-300000019411mgln:PharmacyManagementMemberus-gaap:TransferredAtPointInTimeMember2020-01-012020-06-300000019411mgln:PharmacyBenefitAdministrationMembermgln:PharmacyManagementMember2020-01-012020-06-300000019411mgln:PbmIncludingDispensingMembermgln:PharmacyManagementMember2020-01-012020-06-300000019411mgln:OtherServiceLinesMembermgln:PharmacyManagementMember2020-01-012020-06-300000019411mgln:NonGovernmentMembermgln:PharmacyManagementMember2020-01-012020-06-300000019411mgln:NonGovernmentMembermgln:HealthcareSegmentMember2020-01-012020-06-300000019411mgln:MedicarePartDMembermgln:PharmacyManagementMember2020-01-012020-06-300000019411mgln:HealthcareSegmentMemberus-gaap:TransferredOverTimeMember2020-01-012020-06-300000019411mgln:GovernmentCustomerMembermgln:PharmacyManagementMember2020-01-012020-06-300000019411mgln:GovernmentCustomerMembermgln:HealthcareSegmentMember2020-01-012020-06-300000019411mgln:FormularyManagementMembermgln:PharmacyManagementMember2020-01-012020-06-300000019411mgln:CustomerBMembermgln:PharmacyManagementMember2020-01-012020-06-300000019411mgln:CustomerAMembermgln:HealthcareSegmentMember2020-01-012020-06-300000019411mgln:CorporateAndEliminationsMembermgln:PharmacyBenefitManagementMember2020-01-012020-06-300000019411mgln:CorporateAndEliminationsMembermgln:ManagedCareAndOtherMember2020-01-012020-06-300000019411mgln:BehavioralAndSpecialtyHealthRiskBasedNonEmployeeAssistanceProgramsMembermgln:HealthcareSegmentMember2020-01-012020-06-300000019411mgln:BehavioralAndSpecialtyHealthEmployeeAssistanceProgramsRiskBasedMembermgln:HealthcareSegmentMember2020-01-012020-06-300000019411mgln:BehavioralAndSpecialtyHealthAdministrativeServicesOnlyMembermgln:PharmacyManagementMember2020-01-012020-06-300000019411mgln:BehavioralAndSpecialtyHealthAdministrativeServicesOnlyMembermgln:HealthcareSegmentMember2020-01-012020-06-300000019411us-gaap:TransferredOverTimeMember2020-01-012020-06-300000019411us-gaap:TransferredAtPointInTimeMember2020-01-012020-06-300000019411srt:ConsolidationEliminationsMember2020-01-012020-06-300000019411mgln:UnitedStatesFederalGovernmentCustomerMember2020-01-012020-06-300000019411mgln:PharmacyManagementMember2020-01-012020-06-300000019411mgln:PharmacyBenefitManagementMember2020-01-012020-06-300000019411mgln:PharmacyBenefitAdministrationMember2020-01-012020-06-300000019411mgln:PbmIncludingDispensingMember2020-01-012020-06-300000019411mgln:OtherServiceLinesMember2020-01-012020-06-300000019411mgln:NonGovernmentMember2020-01-012020-06-300000019411mgln:MedicarePartDMember2020-01-012020-06-300000019411mgln:ManagedCareAndOtherMember2020-01-012020-06-300000019411mgln:GovernmentCustomerMember2020-01-012020-06-300000019411mgln:GeographicConcentrationRiskAreaOneMember2020-01-012020-06-300000019411mgln:FormularyManagementMember2020-01-012020-06-300000019411mgln:CentersForMedicareAndMedicaidServicesMember2020-01-012020-06-300000019411mgln:BehavioralAndSpecialtyHealthRiskBasedNonEmployeeAssistanceProgramsMember2020-01-012020-06-300000019411mgln:BehavioralAndSpecialtyHealthEmployeeAssistanceProgramsRiskBasedMember2020-01-012020-06-300000019411mgln:BehavioralAndSpecialtyHealthAdministrativeServicesOnlyMember2020-01-012020-06-300000019411us-gaap:OperatingSegmentsMembermgln:PharmacyBenefitManagementMembermgln:PharmacyManagementMember2019-04-012019-06-300000019411us-gaap:OperatingSegmentsMembermgln:ManagedCareAndOtherMembermgln:PharmacyManagementMember2019-04-012019-06-300000019411us-gaap:OperatingSegmentsMembermgln:ManagedCareAndOtherMembermgln:HealthcareSegmentMember2019-04-012019-06-300000019411srt:ConsolidationEliminationsMemberus-gaap:TransferredOverTimeMember2019-04-012019-06-300000019411srt:ConsolidationEliminationsMemberus-gaap:TransferredAtPointInTimeMember2019-04-012019-06-300000019411srt:ConsolidationEliminationsMembermgln:PbmIncludingDispensingMember2019-04-012019-06-300000019411srt:ConsolidationEliminationsMembermgln:NonGovernmentMember2019-04-012019-06-300000019411srt:ConsolidationEliminationsMembermgln:BehavioralAndSpecialtyHealthRiskBasedNonEmployeeAssistanceProgramsMember2019-04-012019-06-300000019411srt:ConsolidationEliminationsMembermgln:BehavioralAndSpecialtyHealthAdministrativeServicesOnlyMember2019-04-012019-06-300000019411mgln:PharmacyManagementMemberus-gaap:TransferredOverTimeMember2019-04-012019-06-300000019411mgln:PharmacyManagementMemberus-gaap:TransferredAtPointInTimeMember2019-04-012019-06-300000019411mgln:PharmacyBenefitAdministrationMembermgln:PharmacyManagementMember2019-04-012019-06-300000019411mgln:PbmIncludingDispensingMembermgln:PharmacyManagementMember2019-04-012019-06-300000019411mgln:OtherServiceLinesMembermgln:PharmacyManagementMember2019-04-012019-06-300000019411mgln:NonGovernmentMembermgln:PharmacyManagementMember2019-04-012019-06-300000019411mgln:NonGovernmentMembermgln:HealthcareSegmentMember2019-04-012019-06-300000019411mgln:MedicarePartDMembermgln:PharmacyManagementMember2019-04-012019-06-300000019411mgln:HealthcareSegmentMemberus-gaap:TransferredOverTimeMember2019-04-012019-06-300000019411mgln:GovernmentCustomerMembermgln:PharmacyManagementMember2019-04-012019-06-300000019411mgln:GovernmentCustomerMembermgln:HealthcareSegmentMember2019-04-012019-06-300000019411mgln:FormularyManagementMembermgln:PharmacyManagementMember2019-04-012019-06-300000019411mgln:CorporateAndEliminationsMembermgln:PharmacyBenefitManagementMember2019-04-012019-06-300000019411mgln:CorporateAndEliminationsMembermgln:ManagedCareAndOtherMember2019-04-012019-06-300000019411mgln:BehavioralAndSpecialtyHealthRiskBasedNonEmployeeAssistanceProgramsMembermgln:HealthcareSegmentMember2019-04-012019-06-300000019411mgln:BehavioralAndSpecialtyHealthEmployeeAssistanceProgramsRiskBasedMembermgln:HealthcareSegmentMember2019-04-012019-06-300000019411mgln:BehavioralAndSpecialtyHealthAdministrativeServicesOnlyMembermgln:PharmacyManagementMember2019-04-012019-06-300000019411mgln:BehavioralAndSpecialtyHealthAdministrativeServicesOnlyMembermgln:HealthcareSegmentMember2019-04-012019-06-300000019411us-gaap:TransferredOverTimeMember2019-04-012019-06-300000019411us-gaap:TransferredAtPointInTimeMember2019-04-012019-06-300000019411srt:ConsolidationEliminationsMember2019-04-012019-06-300000019411mgln:PharmacyManagementMember2019-04-012019-06-300000019411mgln:PharmacyBenefitManagementMember2019-04-012019-06-300000019411mgln:PharmacyBenefitAdministrationMember2019-04-012019-06-300000019411mgln:PbmIncludingDispensingMember2019-04-012019-06-300000019411mgln:OtherServiceLinesMember2019-04-012019-06-300000019411mgln:NonGovernmentMember2019-04-012019-06-300000019411mgln:MedicarePartDMember2019-04-012019-06-300000019411mgln:ManagedCareAndOtherMember2019-04-012019-06-300000019411mgln:GovernmentCustomerMember2019-04-012019-06-300000019411mgln:FormularyManagementMember2019-04-012019-06-300000019411mgln:BehavioralAndSpecialtyHealthRiskBasedNonEmployeeAssistanceProgramsMember2019-04-012019-06-300000019411mgln:BehavioralAndSpecialtyHealthEmployeeAssistanceProgramsRiskBasedMember2019-04-012019-06-300000019411mgln:BehavioralAndSpecialtyHealthAdministrativeServicesOnlyMember2019-04-012019-06-300000019411us-gaap:OperatingSegmentsMembermgln:PharmacyBenefitManagementMembermgln:PharmacyManagementMember2019-01-012019-06-300000019411us-gaap:OperatingSegmentsMembermgln:ManagedCareAndOtherMembermgln:PharmacyManagementMember2019-01-012019-06-300000019411us-gaap:OperatingSegmentsMembermgln:ManagedCareAndOtherMembermgln:HealthcareSegmentMember2019-01-012019-06-300000019411srt:ConsolidationEliminationsMemberus-gaap:TransferredOverTimeMember2019-01-012019-06-300000019411srt:ConsolidationEliminationsMemberus-gaap:TransferredAtPointInTimeMember2019-01-012019-06-300000019411srt:ConsolidationEliminationsMembermgln:PbmIncludingDispensingMember2019-01-012019-06-300000019411srt:ConsolidationEliminationsMembermgln:NonGovernmentMember2019-01-012019-06-300000019411srt:ConsolidationEliminationsMembermgln:BehavioralAndSpecialtyHealthRiskBasedNonEmployeeAssistanceProgramsMember2019-01-012019-06-300000019411srt:ConsolidationEliminationsMembermgln:BehavioralAndSpecialtyHealthAdministrativeServicesOnlyMember2019-01-012019-06-300000019411mgln:PharmacyManagementMemberus-gaap:TransferredOverTimeMember2019-01-012019-06-300000019411mgln:PharmacyManagementMemberus-gaap:TransferredAtPointInTimeMember2019-01-012019-06-300000019411mgln:PharmacyBenefitAdministrationMembermgln:PharmacyManagementMember2019-01-012019-06-300000019411mgln:PbmIncludingDispensingMembermgln:PharmacyManagementMember2019-01-012019-06-300000019411mgln:OtherServiceLinesMembermgln:PharmacyManagementMember2019-01-012019-06-300000019411mgln:NonGovernmentMembermgln:PharmacyManagementMember2019-01-012019-06-300000019411mgln:NonGovernmentMembermgln:HealthcareSegmentMember2019-01-012019-06-300000019411mgln:MedicarePartDMembermgln:PharmacyManagementMember2019-01-012019-06-300000019411mgln:HealthcareSegmentMemberus-gaap:TransferredOverTimeMember2019-01-012019-06-300000019411mgln:GovernmentCustomerMembermgln:PharmacyManagementMember2019-01-012019-06-300000019411mgln:GovernmentCustomerMembermgln:HealthcareSegmentMember2019-01-012019-06-300000019411mgln:FormularyManagementMembermgln:PharmacyManagementMember2019-01-012019-06-300000019411mgln:CustomerBMembermgln:PharmacyManagementMember2019-01-012019-06-300000019411mgln:CustomerAMembermgln:HealthcareSegmentMember2019-01-012019-06-300000019411mgln:CorporateAndEliminationsMembermgln:PharmacyBenefitManagementMember2019-01-012019-06-300000019411mgln:CorporateAndEliminationsMembermgln:ManagedCareAndOtherMember2019-01-012019-06-300000019411mgln:BehavioralAndSpecialtyHealthRiskBasedNonEmployeeAssistanceProgramsMembermgln:HealthcareSegmentMember2019-01-012019-06-300000019411mgln:BehavioralAndSpecialtyHealthEmployeeAssistanceProgramsRiskBasedMembermgln:HealthcareSegmentMember2019-01-012019-06-300000019411mgln:BehavioralAndSpecialtyHealthAdministrativeServicesOnlyMembermgln:PharmacyManagementMember2019-01-012019-06-300000019411mgln:BehavioralAndSpecialtyHealthAdministrativeServicesOnlyMembermgln:HealthcareSegmentMember2019-01-012019-06-300000019411us-gaap:TransferredOverTimeMember2019-01-012019-06-300000019411us-gaap:TransferredAtPointInTimeMember2019-01-012019-06-300000019411srt:ConsolidationEliminationsMember2019-01-012019-06-300000019411mgln:UnitedStatesFederalGovernmentCustomerMember2019-01-012019-06-300000019411mgln:PharmacyManagementMember2019-01-012019-06-300000019411mgln:PharmacyBenefitManagementMember2019-01-012019-06-300000019411mgln:PharmacyBenefitAdministrationMember2019-01-012019-06-300000019411mgln:PbmIncludingDispensingMember2019-01-012019-06-300000019411mgln:OtherServiceLinesMember2019-01-012019-06-300000019411mgln:NonGovernmentMember2019-01-012019-06-300000019411mgln:MedicarePartDMember2019-01-012019-06-300000019411mgln:ManagedCareAndOtherMember2019-01-012019-06-300000019411mgln:GovernmentCustomerMember2019-01-012019-06-300000019411mgln:GeographicConcentrationRiskAreaOneMember2019-01-012019-06-300000019411mgln:FormularyManagementMember2019-01-012019-06-300000019411mgln:CentersForMedicareAndMedicaidServicesMember2019-01-012019-06-300000019411mgln:BehavioralAndSpecialtyHealthRiskBasedNonEmployeeAssistanceProgramsMember2019-01-012019-06-300000019411mgln:BehavioralAndSpecialtyHealthEmployeeAssistanceProgramsRiskBasedMember2019-01-012019-06-300000019411mgln:BehavioralAndSpecialtyHealthAdministrativeServicesOnlyMember2019-01-012019-06-3000000194112019-08-012019-08-310000019411us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-012020-06-300000019411us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-06-300000019411us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-04-012019-06-300000019411us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-06-300000019411us-gaap:DiscontinuedOperationsHeldforsaleMembermgln:MagellanCompleteCareBusinessMemberus-gaap:StateAndLocalJurisdictionMember2020-06-300000019411us-gaap:StateAndLocalJurisdictionMember2020-06-300000019411mgln:HealthcareSegmentMember2020-04-012020-06-300000019411mgln:HealthcareSegmentMember2020-01-012020-06-300000019411mgln:HealthcareSegmentMember2019-04-012019-06-300000019411mgln:HealthcareSegmentMember2019-01-012019-06-300000019411us-gaap:RetainedEarningsMember2020-04-012020-06-300000019411us-gaap:RetainedEarningsMember2020-01-012020-06-300000019411us-gaap:RetainedEarningsMember2019-04-012019-06-300000019411us-gaap:RetainedEarningsMember2019-01-012019-06-300000019411mgln:CreditAgreement2017SeniorUnsecuredTermLoanFacilityMemberus-gaap:UnsecuredDebtMember2020-06-300000019411mgln:SeniorNotesDue20244.400PercentMemberus-gaap:FairValueInputsLevel1Member2020-06-300000019411mgln:CreditAgreement2017SeniorUnsecuredTermLoanFacilityMemberus-gaap:FairValueInputsLevel2Member2020-06-300000019411mgln:CreditAgreement2017SeniorUnsecuredRevolvingCreditFacilityMemberus-gaap:UnsecuredDebtMember2020-01-012020-06-300000019411mgln:CreditAgreement2017SeniorUnsecuredRevolvingCreditFacilityMemberus-gaap:UnsecuredDebtMember2020-06-300000019411mgln:CreditAgreement2017Memberus-gaap:UnsecuredDebtMember2020-06-300000019411mgln:CreditAgreement2017SeniorUnsecuredTermLoanFacilityMemberus-gaap:UnsecuredDebtMember2017-09-220000019411mgln:CreditAgreement2017SeniorUnsecuredRevolvingCreditFacilityMemberus-gaap:UnsecuredDebtMember2017-09-220000019411mgln:CreditAgreement2017SeniorUnsecuredRevolvingCreditFacilityMemberus-gaap:UnsecuredDebtMember2019-12-310000019411srt:MinimumMember2020-06-300000019411srt:MaximumMember2020-06-300000019411mgln:PharmacyManagementMember2020-06-300000019411mgln:SeniorNotesDue20244.400PercentMemberus-gaap:SeniorNotesMember2019-01-012019-12-310000019411mgln:VirginiaContractsMemberus-gaap:DiscontinuedOperationsHeldforsaleMembermgln:MagellanCompleteCareBusinessMember2020-01-012020-06-300000019411mgln:MassachusettsContractsMemberus-gaap:DiscontinuedOperationsHeldforsaleMembermgln:MagellanCompleteCareBusinessMember2020-01-012020-06-300000019411mgln:NewYorkContractsMember2020-01-012020-06-300000019411mgln:VirginiaContractsMemberus-gaap:DiscontinuedOperationsHeldforsaleMembermgln:MagellanCompleteCareBusinessMember2019-01-012019-06-300000019411mgln:MassachusettsContractsMemberus-gaap:DiscontinuedOperationsHeldforsaleMembermgln:MagellanCompleteCareBusinessMember2019-01-012019-06-300000019411mgln:NewYorkContractsMember2019-01-012019-06-300000019411us-gaap:DiscontinuedOperationsHeldforsaleMembermgln:MagellanCompleteCareBusinessMember2020-04-300000019411mgln:SeniorNotesDue20244.400PercentMemberus-gaap:SeniorNotesMember2020-06-300000019411mgln:SeniorNotesDue20244.400PercentMemberus-gaap:SeniorNotesMember2019-12-310000019411mgln:SeniorNotesDue20244.400PercentMemberus-gaap:SeniorNotesMember2020-01-012020-06-300000019411mgln:CreditAgreement2017Memberus-gaap:UnsecuredDebtMember2020-01-012020-06-300000019411mgln:CreditAgreement2017Memberus-gaap:UnsecuredDebtMember2018-08-122018-08-120000019411mgln:CreditAgreement2017Memberus-gaap:UnsecuredDebtMember2017-09-222017-09-220000019411mgln:SeniorNotesDue20244.400PercentMemberus-gaap:SeniorNotesMember2017-09-220000019411mgln:CreditAgreement2017SeniorUnsecuredTermLoanFacilityMemberus-gaap:UnsecuredDebtMemberus-gaap:PrimeRateMember2017-09-222017-09-220000019411mgln:CreditAgreement2017SeniorUnsecuredTermLoanFacilityMemberus-gaap:UnsecuredDebtMemberus-gaap:FederalFundsEffectiveSwapRateMember2017-09-222017-09-220000019411mgln:CreditAgreement2017SeniorUnsecuredTermLoanFacilityMemberus-gaap:UnsecuredDebtMembermgln:DebtInstrumentVariableRateEurodollarRateForSelectedInterestPeriodMember2017-09-222017-09-220000019411mgln:CreditAgreement2017SeniorUnsecuredTermLoanFacilityMemberus-gaap:UnsecuredDebtMembermgln:DebtInstrumentVariableRateBaseOneMonthEurodollarMember2017-09-222017-09-220000019411us-gaap:TreasuryStockCommonMember2020-06-300000019411us-gaap:CommonStockMember2020-06-300000019411us-gaap:TreasuryStockCommonMember2020-03-310000019411us-gaap:CommonStockMember2020-03-310000019411us-gaap:TreasuryStockCommonMember2019-12-310000019411us-gaap:CommonStockMember2019-12-310000019411us-gaap:TreasuryStockCommonMember2019-06-300000019411us-gaap:CommonStockMember2019-06-300000019411us-gaap:TreasuryStockCommonMember2019-03-310000019411us-gaap:CommonStockMember2019-03-310000019411us-gaap:TreasuryStockCommonMember2018-12-310000019411us-gaap:CommonStockMember2018-12-3100000194112019-06-3000000194112018-12-310000019411mgln:OtherThanCashInEntityBankAccountsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2020-06-300000019411mgln:OtherThanCashInEntityBankAccountsMemberus-gaap:FairValueMeasurementsRecurringMember2020-06-300000019411mgln:OtherThanCashInEntityBankAccountsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2019-12-310000019411mgln:OtherThanCashInEntityBankAccountsMemberus-gaap:FairValueMeasurementsRecurringMember2019-12-310000019411us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2020-06-300000019411us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CertificatesOfDepositMember2020-06-300000019411us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember2020-06-300000019411us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember2020-06-300000019411us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2020-06-300000019411us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CertificatesOfDepositMember2020-06-300000019411us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2019-12-310000019411us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CertificatesOfDepositMember2019-12-310000019411us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember2019-12-310000019411us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember2019-12-310000019411us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2019-12-310000019411us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CertificatesOfDepositMember2019-12-310000019411us-gaap:CertificatesOfDepositMember2020-06-300000019411us-gaap:CertificatesOfDepositMember2019-12-310000019411us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember2020-06-300000019411us-gaap:CorporateDebtSecuritiesMember2020-06-300000019411us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember2019-12-310000019411us-gaap:CorporateDebtSecuritiesMember2019-12-310000019411us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2020-06-300000019411us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2020-06-300000019411us-gaap:FairValueMeasurementsRecurringMember2020-06-300000019411us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2019-12-310000019411us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2019-12-310000019411us-gaap:FairValueMeasurementsRecurringMember2019-12-310000019411us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300000019411us-gaap:AdditionalPaidInCapitalMember2020-01-012020-06-300000019411us-gaap:AdditionalPaidInCapitalMember2019-04-012019-06-300000019411us-gaap:AdditionalPaidInCapitalMember2019-01-012019-06-300000019411mgln:CentersForMedicareAndMedicaidServicesMember2020-06-300000019411mgln:CentersForMedicareAndMedicaidServicesMember2019-12-310000019411mgln:CmsContractMember2020-01-012020-06-300000019411mgln:SCOContractMember2020-01-012020-06-300000019411mgln:MedallionContractMember2020-01-012020-06-300000019411mgln:CccPlusContractMember2020-01-012020-06-300000019411mgln:ShareRepurchaseProgramOctober2015Member2018-05-242018-05-2400000194112020-07-012020-07-3100000194112019-01-012019-12-3100000194112018-01-012018-12-3100000194112017-01-012017-12-3100000194112016-01-012016-12-3100000194112015-10-262020-06-3000000194112015-10-262015-12-310000019411us-gaap:PerformanceSharesMember2020-06-300000019411srt:MinimumMemberus-gaap:PerformanceSharesMember2020-01-012020-06-300000019411srt:MaximumMemberus-gaap:PerformanceSharesMember2020-01-012020-06-300000019411srt:MinimumMember2020-04-012020-06-300000019411srt:MaximumMember2020-04-012020-06-300000019411srt:MinimumMember2019-04-012019-06-300000019411srt:MaximumMember2019-04-012019-06-300000019411srt:MinimumMember2019-01-012019-06-300000019411srt:MaximumMember2019-01-012019-06-300000019411mgln:SCOContractMembersrt:MaximumMember2020-06-300000019411mgln:CccPlusContractMembersrt:MaximumMember2020-06-300000019411mgln:MedallionContractMember2020-06-300000019411us-gaap:PerformanceSharesMember2020-01-012020-06-300000019411srt:MaximumMember2020-01-012020-06-300000019411srt:MinimumMember2020-01-012020-06-300000019411us-gaap:DiscontinuedOperationsHeldforsaleMembermgln:MagellanCompleteCareBusinessMember2020-06-300000019411us-gaap:DiscontinuedOperationsHeldforsaleMembermgln:MagellanCompleteCareBusinessMember2019-12-310000019411us-gaap:DiscontinuedOperationsHeldforsaleMembermgln:MagellanCompleteCareBusinessMember2020-04-012020-06-300000019411us-gaap:DiscontinuedOperationsHeldforsaleMembermgln:MagellanCompleteCareBusinessMember2020-01-012020-06-300000019411us-gaap:DiscontinuedOperationsHeldforsaleMembermgln:MagellanCompleteCareBusinessMember2019-04-012019-06-300000019411us-gaap:DiscontinuedOperationsHeldforsaleMembermgln:MagellanCompleteCareBusinessMember2019-01-012019-06-300000019411us-gaap:OperatingSegmentsMembermgln:PharmacyManagementMember2020-04-012020-06-300000019411us-gaap:OperatingSegmentsMembermgln:HealthcareSegmentMember2020-04-012020-06-300000019411mgln:CorporateAndEliminationsMember2020-04-012020-06-3000000194112020-04-012020-06-300000019411us-gaap:OperatingSegmentsMembermgln:PharmacyManagementMember2020-01-012020-06-300000019411us-gaap:OperatingSegmentsMembermgln:HealthcareSegmentMember2020-01-012020-06-300000019411mgln:CorporateAndEliminationsMember2020-01-012020-06-300000019411us-gaap:OperatingSegmentsMembermgln:PharmacyManagementMember2019-04-012019-06-300000019411us-gaap:OperatingSegmentsMembermgln:HealthcareSegmentMember2019-04-012019-06-300000019411mgln:CorporateAndEliminationsMember2019-04-012019-06-3000000194112019-04-012019-06-300000019411us-gaap:OperatingSegmentsMembermgln:PharmacyManagementMember2019-01-012019-06-300000019411us-gaap:OperatingSegmentsMembermgln:HealthcareSegmentMember2019-01-012019-06-300000019411mgln:CorporateAndEliminationsMember2019-01-012019-06-3000000194112019-01-012019-06-300000019411us-gaap:AccruedLiabilitiesMember2020-01-012020-06-300000019411mgln:LiabilitiesHeldForSaleMember2020-01-012020-06-300000019411mgln:ArmedForcesServicesCorporationMember2020-01-012020-06-300000019411mgln:ArmedForcesServicesCorporationMember2019-01-012019-12-3100000194112019-12-3100000194112020-06-3000000194112020-01-012020-06-30xbrli:sharesiso4217:USDxbrli:sharesiso4217:USDxbrli:puremgln:leasemgln:companymgln:itemmgln:Dmgln:segment

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2020

Or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 1-6639

MAGELLAN HEALTH, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

58-1076937
(IRS Employer
Identification No.)

4801 E. Washington Street
Phoenix, Arizona
(Address of principal executive offices)

85034
(Zip code)

(800642-1716

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

MGLN

The NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange

Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 

The number of shares of Magellan Health, Inc.’s common stock outstanding as of June 30, 2020 was 25,310,420.

Table of Contents

FORM 10-Q

MAGELLAN HEALTH, INC. AND SUBSIDIARIES

INDEX

Page No.

PART IFinancial Information:

Item 1:

Financial Statements

2

Consolidated Balance Sheets—December 31, 2019 and June 30, 2020

2

Consolidated Statements of Comprehensive Income —For the Three and Six Months Ended June 30, 2019 and 2020

3

Consolidated Statements Changes in Stockholders’ Equity—For the Three and Six Months Ended June 30, 2019 and 2020

4

Consolidated Statements of Cash Flows—For the Six Months Ended June 30, 2019 and 2020

5

Notes to Consolidated Financial Statements

6

Item 2:

Management’s Discussion and Analysis of Financial Condition and Results of Operations

32

Item 3:

Quantitative and Qualitative Disclosures about Market Risk

44

Item 4:

Controls and Procedures

44

PART IIOther Information:

Item 1:

Legal Proceedings

44

Item 1A:

Risk Factors

45

Item 2:

Unregistered Sales of Equity Securities and Use of Proceeds

48

Item 3:

Defaults Upon Senior Securities

48

Item 4:

Mine Safety Disclosures

48

Item 5:

Other Information

48

Item 6:

Exhibits

48

Exhibit Index

49

Signatures

50

1

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

MAGELLAN HEALTH, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)

December 31, 

June 30, 

2019

    

2020

    

ASSETS

Current Assets:

Cash and cash equivalents ($51,253 and $28,237 restricted at December 31, 2019 and June 30, 2020, respectively)

$

115,752

$

160,419

Accounts receivable, net

 

680,569

 

753,065

Short-term investments ($82,772 and $46,315 restricted at December 31, 2019 and June 30, 2020, respectively)

 

98,797

 

75,671

Pharmaceutical inventory

 

44,962

 

36,694

Other current assets ($36,215 and $73,905 restricted at December 31, 2019 and June 30, 2020, respectively)

 

69,687

 

80,375

Current portion of assets held for sale

663,276

1,145,904

Total Current Assets

 

1,673,043

 

2,252,128

Property and equipment, net

 

131,712

 

141,035

Long-term investments ($2,307 restricted at December 31, 2019)

 

2,864

 

Deferred income taxes

1,840

28,519

Other long-term assets

 

58,905

 

60,770

Goodwill

 

806,421

 

806,421

Other intangible assets, net

 

81,675

 

62,330

Assets held for sale, less current portion

335,713

Total Assets

$

3,092,173

$

3,351,203

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Accounts payable

$

83,790

$

99,199

Accrued liabilities

 

191,854

 

187,286

Medical claims payable

 

128,114

 

112,077

Other medical liabilities

 

92,915

 

110,268

Current debt, finance lease and deferred financing obligations

 

3,491

 

84,942

Current portion of liabilities held for sale

409,983

504,459

Total Current Liabilities

 

910,147

 

1,098,231

Long-term debt, finance lease and deferred financing obligations

 

679,125

 

641,950

Deferred income taxes

1,971

Tax contingencies

 

9,453

 

11,097

Deferred credits and other long-term liabilities

 

56,393

 

56,956

Liabilities held for sale, less current portion

37,301

Total Liabilities

 

1,694,390

 

1,808,234

Preferred stock, par value $.01 per share

Authorized—10,000 shares at December 31, 2019 and June 30, 2020-Issued and outstanding-none

 

 

Common stock, par value $.01 per share

Authorized—100,000 shares at December 31, 2019 and June 30, 2020-Issued and outstanding-54,285 and 24,623 shares at December 31, 2019, respectively, and 54,972 and 25,310 shares at June 30, 2020, respectively

 

543

 

550

Other Stockholders’ Equity:

Additional paid-in capital

 

1,386,616

 

1,429,995

Retained earnings

 

1,475,207

 

1,576,549

Accumulated other comprehensive income

 

144

 

602

Treasury stock, at cost, 29,662 and 29,662 shares at December 31, 2019 and June 30, 2020, respectively

 

(1,464,727)

 

(1,464,727)

Total Stockholders’ Equity

 

1,397,783

 

1,542,969

Total Liabilities and Stockholders’ Equity

$

3,092,173

$

3,351,203

See accompanying notes to consolidated financial statements.

2

Table of Contents

MAGELLAN HEALTH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands, except per share amounts)

    

Three Months Ended

Six Months Ended

 

June 30, 

June 30, 

2019

    

2020

    

2019

    

2020

    

Net revenue:

Managed care and other

$

608,614

$

548,711

$

1,175,162

$

1,101,879

PBM

 

545,675

 

551,364

 

1,098,133

 

1,120,575

Total net revenue

 

1,154,289

 

1,100,075

 

2,273,295

 

2,222,454

Costs and expenses:

Cost of care

 

408,911

 

321,831

 

778,008

 

670,939

Cost of goods sold

 

501,081

 

528,067

 

1,027,395

 

1,061,308

Direct service costs and other operating expenses (1)

 

195,907

 

199,756

 

398,207

 

403,997

Depreciation and amortization

 

28,191

 

23,888

 

53,608

 

47,246

Interest expense

 

9,070

 

7,995

 

18,107

 

16,953

Interest and other income

 

(1,821)

 

(551)

 

(3,580)

 

(1,770)

Special charges

-

8,309

-

8,309

Total costs and expenses

 

1,141,339

 

1,089,295

 

2,271,745

 

2,206,982

Income from continuing operations before income taxes

 

12,950

 

10,780

 

1,550

 

15,472

Provision (benefit) for income taxes

 

5,735

 

(36,328)

 

2,526

 

(30,566)

Net income (loss) from continuing operations

7,215

47,108

(976)

46,038

Income from discontinued operations, net of tax

6,398

36,397

15,020

55,717

Net income

$

13,613

$

83,505

$

14,044

$

101,755

Net income (loss) per common share:

Basic (See Note A)

Continuing operations

$

0.30

$

1.88

$

(0.04)

$

1.85

Discontinued operations

0.26

1.45

0.62

2.24

Consolidated operations

$

0.56

$

3.33

$

0.58

$

4.09

Diluted (See Note A)

Continuing operations

$

0.30

$

1.86

$

(0.04)

$

1.84

Discontinued operations

0.26

1.44

0.62

2.22

Consolidated operations

$

0.56

$

3.30

$

0.58

$

4.06

Other comprehensive income

Unrealized gains on available-for-sale securities (2)

 

419

 

659

 

739

 

458

Comprehensive income

$

14,032

$

84,164

$

14,783

$

102,213

(1)Includes stock compensation expense of $5,207 and $6,592, for the three months ended June 30, 2019 and 2020, respectively and $14,607 and $12,389 for the six months ended June 30, 2019 and 2020, respectively.
(2)Net of income tax provision of $131 and $219 for the three months ended June 30, 2019 and 2020, respectively, and $231 and $152 for the six months ended June 30, 2019 and 2020, respectively.

See accompanying notes to consolidated financial statements.

3

Table of Contents

MAGELLAN HEALTH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands)

                  

Accumulated

                   

 

                               

Common Stock

Additional

Other

Total

 

 Common Stock

In Treasury

Paid in

Retained

  Comprehensive  

Stockholders’

 

    

Shares

    

 Amount 

    

Shares

    

Amount

    

Capital

    

Earnings

    

(Loss) Income

    

Equity

 

Balance at March 31, 2019

53,695

$

537

 

(29,662)

$

(1,464,727)

$

1,337,849

$

1,419,735

$

(4)

$

1,293,390

Stock compensation expense

 

 

 

 

5,414

 

 

 

5,414

Exercise of stock options

348

 

4

 

 

 

21,430

 

 

 

21,434

Issuance of equity

20

 

 

 

 

 

 

 

Net income

 

 

 

 

 

13,613

 

 

13,613

Other comprehensive income—other

419

 

419

Balance at June 30, 2019

54,063

$

541

(29,662)

$

(1,464,727)

$

1,364,693

$

1,433,348

$

415

$

1,334,270

Balance at March 31, 2020

54,631

$

546

 

(29,662)

$

(1,464,727)

$

1,402,797

$

1,493,044

$

(57)

$

1,431,603

Stock compensation expense

 

 

 

 

6,958

 

 

 

6,958

Exercise of stock options

324

 

4

 

 

 

20,240

 

 

 

20,244

Issuance of equity

17

 

 

 

 

 

 

 

Net income

 

 

 

 

 

83,505

 

 

83,505

Other comprehensive (loss)—other

659

659

Balance at June 30, 2020

54,972

$

550

 

(29,662)

$

(1,464,727)

$

1,429,995

$

1,576,549

$

602

$

1,542,969

Balance at December 31, 2018

 

53,536

$

535

 

(29,601)

$

(1,461,002)

$

1,326,645

$

1,419,449

$

(324)

$

1,285,303

Stock compensation expense

 

 

 

 

 

15,021

 

 

 

15,021

Exercise of stock options

 

389

 

5

 

 

 

23,474

 

 

 

23,479

Issuance of equity

 

138

 

1

 

 

 

(447)

 

 

 

(446)

Repurchase of stock

 

 

 

(61)

 

(3,725)

 

 

 

 

(3,725)

Net income

 

 

 

 

 

 

14,044

 

 

14,044

Other comprehensive income—other

739

 

739

Adoption of ASC 842

 

 

 

 

 

 

(145)

 

 

(145)

Balance at June 30, 2019

54,063

$

541

(29,662)

$

(1,464,727)

$

1,364,693

$

1,433,348

$

415

$

1,334,270

Balance at December 31, 2019

 

54,285

$

543

 

(29,662)

$

(1,464,727)

$

1,386,616

$

1,475,207

$

144

$

1,397,783

Stock compensation expense

 

 

 

 

 

13,015

 

 

 

13,015

Exercise of stock options

 

540

 

6

 

 

 

31,501

 

 

 

31,507

Issuance of equity

 

147

 

1

 

 

 

(1,137)

 

 

 

(1,136)

Net income

 

 

 

 

 

 

101,755

 

 

101,755

Other comprehensive income—other

458

458

Adoption of ASC 326

(413)

(413)

Balance at June 30, 2020

 

54,972

$

550

 

(29,662)

$

(1,464,727)

$

1,429,995

$

1,576,549

$

602

$

1,542,969

See accompanying notes to consolidated financial statements.

4

Table of Contents

MAGELLAN HEALTH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30,

(Unaudited)

(In thousands)

    

2019

    

2020

Cash flows from operating activities:

Net income

$

14,044

$

101,755

Adjustments to reconcile net income to net cash from operating activities:

Depreciation and amortization

 

64,198

 

57,951

Special Charges

8,309

Non-cash interest expense

 

679

 

941

Non-cash stock compensation expense

 

15,021

 

13,015

Non-cash income tax provision (benefit)

 

1,026

 

(29,443)

Non-cash (amortization) accretion on investments

 

(327)

 

907

Changes in assets and liabilities, net of effects from acquisitions of businesses:

Accounts receivable, net

 

(51,544)

 

(24,535)

Pharmaceutical inventory

 

(4,793)

 

8,268

Other assets

 

(23,890)

 

(38,322)

Accounts payable and accrued liabilities

 

20,821

 

62,970

Medical claims payable and other medical liabilities

 

4,329

 

10,510

Contingent consideration

(3,758)

Tax contingencies

 

610

 

1,343

Deferred credits and other long-term liabilities

 

(7,429)

 

(2,537)

Other

 

372

 

(289)

Net cash provided by operating activities

29,359

170,843

Net cash (used in) provided by operating activities from discontinued operations

(16,574)

178,326

Net cash provided by (used in) operating activities from continuing operations

 

45,933

 

(7,483)

Cash flows from investing activities:

Capital expenditures

 

(27,804)

 

(38,305)

Acquisitions and investments in businesses, net of cash acquired

 

(320)

 

(369)

Purchases of investments

 

(295,768)

 

(417,688)

Proceeds from maturities and sales of investments

 

288,290

 

288,137

Net cash used in investing activities

(35,602)

(168,225)

Net cash used in investing activities from discontinued operations

(3,210)

(156,800)

Net cash used in investing activities from continuing operations

 

(32,392)

 

(11,425)

Cash flows from financing activities:

Proceeds from borrowings on revolving line of credit

 

 

80,000

Payments to acquire treasury stock

 

(4,124)

 

Proceeds from exercise of stock options

 

20,647

 

29,825

Payments on debt, finance lease and deferred financing obligations

(15,543)

(40,264)

Payments on contingent consideration

(6,247)

Other

 

(446)

 

(1,136)

Net cash (used in) provided by financing activities

(5,713)

68,425

Net cash provided by financing activities from discontinued operations

4,850

Net cash (used in) provided by financing activities from continuing operations

 

(5,713)

 

63,575

Net increase in cash and cash equivalents from continuing operations

 

7,828

 

44,667

Cash and cash equivalents at beginning of period

 

86,923

 

115,752

Cash and cash equivalents at end of period

$

94,751

$

160,419

Supplemental cash flow data:

Non-cash investing activities:

Assets acquired under finance leases and deferred financing obligations

$

3,302

$

3,599

See accompanying notes to consolidated financial statements.

5

Table of Contents

MAGELLAN HEALTH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

(Unaudited)

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, 2020 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. On April 30, 2020, the Company and Molina Healthcare, Inc. (“Molina”) entered into a Stock and Asset Purchase Agreement (the “Purchase Agreement”) pursuant to which the Company has agreed to sell its Magellan Complete Care (“MCC”) business to Molina (the “MCC Sale”) for $850.0 million in cash, subject to certain adjustments, and Molina has agreed to assume liabilities of the MCC business. Accordingly, the accompanying consolidated financial statements for all periods presented reflect the MCC business as discontinued operations. See Note E—“Discontinued Operations” for additional information.

These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2019 and the notes thereto, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2020.

Business Overview

The Company provides managed care services for some of the most complex areas of healthcare. The Company offers innovative solutions that combine analytics, technology and clinical rigor to drive better decision making, positively impact members’ health outcomes and optimize the cost of care for the customers Magellan serves. 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” previously consisted of two reporting units – Behavioral & Specialty Health and MCC. As a result of the MCC Sale, the Healthcare segment now only includes the Behavioral and Specialty Health reporting unit.

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 (i) behavioral health, (ii) employee assistance plans (“EAP”) and (iii) 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.

MCC, which is now reflected as discontinued operations, 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 more acute 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.

6

Table of Contents

MAGELLAN HEALTH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2020

(Unaudited)

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 contractual arrangements, 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”) contractual arrangements, 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 services that provide clinical and financial management of pharmaceuticals paid under both the medical and the pharmacy benefit. Pharmacy Management’s customer solutions 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 managed care organizations, employers, third party administrators, state governments, Medicare Part D, and other government agencies, exchanges, brokers and consultants. In addition, the Company will continue to upsell its pharmacy services 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 most of the MCC business.

On May 11, 2020, the Company announced its decision to exit the Medicare Part D business at the end of 2020. The Company will retain its Medicare Employer Group Waiver Plan as well as full capabilities to serve the PBM needs of its existing and prospective Medicare customers.

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

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

7

Table of Contents

MAGELLAN HEALTH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2020

(Unaudited)

compensation assumptions, tax contingencies and legal liabilities. In addition, the Company also makes estimates in relation to revenue recognition under Accounting Standard Codification 606 (“ASC 606”) which are explained in more detail in “Revenue Recognition” below. Actual results could differ from those estimates.

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 and 2020 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

58,226

10,327

(82)

68,471

PBM, including dispensing

480,167

(4,335)

475,832

Medicare Part D

69,843

69