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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, 2021

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, 2021 was 26,264,925.

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, 2020 and June 30, 2021

2

Consolidated Statements of Comprehensive Income (Loss)—For the Three and Six Months Ended June 30, 2020 and 2021

3

Consolidated Statements of Changes in Stockholders’ Equity—For the Three and Six Months Ended June 30, 2020 and 2021

4

Consolidated Statements of Cash Flows—For the Six Months Ended June 30, 2020 and 2021

5

Notes to Consolidated Financial Statements

6

Item 2:

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

31

Item 3:

Quantitative and Qualitative Disclosures about Market Risk

43

Item 4:

Controls and Procedures

43

PART IIOther Information:

Item 1:

Legal Proceedings

44

Item 1A:

Risk Factors

44

Item 2:

Unregistered Sales of Equity Securities and Use of Proceeds

44

Item 3:

Defaults Upon Senior Securities

44

Item 4:

Mine Safety Disclosures

44

Item 5:

Other Information

45

Item 6:

Exhibits

45

Exhibit Index

46

Signatures

47

1

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

MAGELLAN HEALTH, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

December 31, 

June 30, 

2020

    

2021

(Unaudited)

ASSETS

Current Assets:

Cash and cash equivalents ($49,227 and $53,934 restricted at December 31, 2020 and June 30, 2021, respectively)

$

1,144,450

$

678,507

Accounts receivable, net

 

743,502

 

826,997

Short-term investments ($88,867 and $35,491 restricted at December 31, 2020 and June 30, 2021, respectively)

 

140,847

 

325,581

Pharmaceutical inventory

 

43,334

 

38,789

Other current assets ($43,547 and $82,110 restricted at December 31, 2020 and June 30, 2021, respectively)

 

84,264

 

145,156

Total Current Assets

 

2,156,397

 

2,015,030

Property and equipment, net

 

136,739

 

141,628

Long-term investments ($1,026 and $1,810 restricted at December 31, 2020 and June 30, 2021, respectively)

 

2,612

 

2,985

Deferred income taxes

1,842

Other long-term assets

 

108,797

 

120,046

Goodwill

 

873,779

 

873,830

Other intangible assets, net

 

79,689

 

64,410

Total Assets

$

3,359,855

$

3,217,929

LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Accounts payable

$

137,380

$

132,298

Accrued liabilities

 

354,906

 

208,322

Medical claims payable

 

111,851

 

147,555

Other medical liabilities

 

126,921

 

138,279

Current debt, finance lease and deferred financing obligations

 

6,521

 

3,176

Total Current Liabilities

 

737,579

 

629,630

Long-term debt, finance lease and deferred financing obligations

 

631,855

 

521,518

Deferred income taxes

7,102

17,634

Tax contingencies

 

11,002

 

12,734

Deferred credits and other long-term liabilities

 

69,283

 

78,918

Total Liabilities

 

1,456,821

 

1,260,434

Redeemable non-controlling interest

 

33,062

 

33,674

Stockholder's Equity:

Preferred stock, par value $.01 per share

Authorized—10,000 shares at December 31, 2020 and June 30, 2021-Issued and outstanding-none

 

 

Common stock, par value $.01 per share

Authorized—100,000 shares at December 31, 2020 and June 30, 2021-Issued and outstanding-55,549 and 25,887 shares at December 31, 2020, respectively, and 55,927 and 26,265 shares at June 30, 2021, respectively

 

555

 

559

Other Stockholders’ Equity:

Additional paid-in capital

 

1,477,219

 

1,503,718

Retained earnings

 

1,857,130

 

1,884,291

Accumulated other comprehensive loss

 

(205)

 

(20)

Treasury stock, at cost, 29,662 and 29,662 shares at December 31, 2020 and June 30, 2021, respectively

 

(1,464,727)

 

(1,464,727)

Total Stockholders’ Equity

 

1,869,972

 

1,923,821

Total Liabilities, Redeemable Non-Controlling Interest and Stockholders’ Equity

$

3,359,855

$

3,217,929

See accompanying notes to consolidated financial statements.

2

Table of Contents

MAGELLAN HEALTH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands, except per share amounts)

    

Three Months Ended

Six Months Ended

 

June 30, 

June 30, 

2020

    

2021

    

2020

    

2021

    

Net revenue:

Managed care and other

$

548,711

$

676,041

$

1,101,879

$

1,302,117

PBM

 

551,364

 

544,727

 

1,120,575

 

1,080,300

Total net revenue

 

1,100,075

 

1,220,768

 

2,222,454

 

2,382,417

Costs, expenses and other income:

Cost of care

 

321,831

 

430,735

 

670,939

 

809,926

Cost of goods sold

 

528,067

 

520,514

 

1,061,308

 

1,012,884

Direct service costs and other operating expenses (1)

 

199,756

 

243,573

 

403,997

 

474,594

Legal matter settlement

(9,000)

Depreciation and amortization

 

23,888

 

22,525

 

47,246

 

43,942

Interest expense

 

7,995

 

6,234

 

16,953

 

12,660

Interest and other income

 

(551)

 

(208)

 

(1,770)

 

(549)

Special charges and other

8,309

5,054

8,309

6,205

Total costs, expenses and other income

 

1,089,295

 

1,228,427

 

2,206,982

 

2,350,662

Income (loss) from continuing operations before income taxes

 

10,780

 

(7,659)

 

15,472

 

31,755

(Benefit) provision for income taxes

 

(36,328)

 

(1,196)

 

(30,566)

 

9,709

Net income (loss) from continuing operations

47,108

(6,463)

46,038

22,046

Income from discontinued operations, net of tax

36,397

5,797

55,717

5,115

Net income (loss)

$

83,505

$

(666)

$

101,755

$

27,161

Net income (loss) per common share:

Basic (See Note A)

Continuing operations

$

1.88

$

(0.25)

$

1.85

$

0.85

Discontinued operations

1.45

0.22

2.24

0.20

Consolidated operations

$

3.33

$

(0.03)

$

4.09

$

1.05

Diluted (See Note A)

Continuing operations

$

1.86

$

(0.25)

$

1.84

$

0.83

Discontinued operations

1.44

0.22

2.22

0.19

Consolidated operations

$

3.30

$

(0.03)

$

4.06

$

1.02

Other comprehensive income (loss)

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

 

659

 

175

 

458

 

185

Comprehensive income (loss)

$

84,164

$

(491)

$

102,213

$

27,346

(1)Includes stock compensation expense of $6,592 and $6,353 for the three months ended June 30, 2020 and 2021, respectively and $12,389 and $13,410 for the six months ended June 30, 2020 and 2021, respectively.
(2)Net of income tax provision of $219 and $65 for the three months ended June 30, 2020 and 2021, respectively and $152 and $69 for the six months ended June 30, 2020 and 2021, 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, 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 income—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 March 31, 2021

55,789

$

558

 

(29,662)

$

(1,464,727)

$

1,488,975

$

1,884,957

$

(195)

$

1,909,568

Stock compensation expense

 

 

 

 

6,353

 

 

 

6,353

Exercise of stock options

113

 

1

 

 

 

6,804

 

 

 

6,805

Issuance of equity

25

 

 

 

 

1,586

 

 

 

1,586

Net loss

 

 

 

 

 

(666)

 

 

(666)

Other comprehensive income—other

175

175

Balance at June 30, 2021

55,927

$

559

 

(29,662)

$

(1,464,727)

$

1,503,718

$

1,884,291

$

(20)

$

1,923,821

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

Balance at December 31, 2020

 

55,549

$

555

 

(29,662)

$

(1,464,727)

$

1,477,219

$

1,857,130

$

(205)

$

1,869,972

Stock compensation expense

 

 

 

 

 

13,410

 

 

 

13,410

Exercise of stock options

 

223

 

3

 

 

 

14,269

 

 

 

14,272

Issuance of equity

 

155

 

1

 

 

 

(1,180)

 

 

 

(1,179)

Net income

 

 

 

 

 

 

27,161

 

 

27,161

Other comprehensive income—other

185

185

Balance at June 30, 2021

 

55,927

$

559

 

(29,662)

$

(1,464,727)

$

1,503,718

$

1,884,291

$

(20)

$

1,923,821

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)

    

2020

    

2021

Cash flows from operating activities:

Net income

$

101,755

$

27,161

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

Depreciation and amortization

 

57,951

 

43,942

Special charges and other

8,309

6,205

Gain on sale of MCC

(8,000)

Non-cash interest expense

 

941

 

710

Non-cash stock compensation expense

 

13,015

 

13,410

Non-cash income tax (benefit) provision

 

(29,443)

 

12,699

Non-cash accretion on investments

 

907

 

1,603

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

Accounts receivable, net

 

(24,535)

 

(75,506)

Pharmaceutical inventory

 

8,268

 

4,545

Other assets

 

(38,322)

 

(78,329)

Accounts payable and accrued liabilities

 

62,970

 

(151,549)

Medical claims payable and other medical liabilities

 

10,510

 

47,062

Tax contingencies

 

1,343

 

1,339

Deferred credits and other long-term liabilities

 

(2,537)

 

9,635

Other

 

(289)

 

2,388

Net cash provided by (used in) operating activities

170,843

(142,685)

Net cash provided by operating activities from discontinued operations

178,326

Net cash used in operating activities from continuing operations

 

(7,483)

 

(142,685)

Cash flows from investing activities:

Capital expenditures

 

(38,305)

 

(35,105)

Acquisitions and investments in businesses, net of cash acquired

 

(369)

 

(2,372)

Purchases of investments

 

(417,688)

 

(680,347)

Proceeds from maturities and sales of investments

 

288,137

 

493,711

Net cash used in investing activities

(168,225)

(224,113)

Net cash used in investing activities from discontinued operations

(156,800)

Net cash used in investing activities from continuing operations

 

(11,425)

 

(224,113)

Cash flows from financing activities:

Proceeds from borrowings on revolving line of credit

 

80,000

 

Proceeds from exercise of stock options

 

29,825

 

14,271

Payments on debt, finance lease and deferred financing obligations

(40,264)

(112,238)

Other

 

(1,136)

 

(1,178)

Net cash provided by (used in) financing activities

68,425

(99,145)

Net cash provided by financing activities from discontinued operations

4,850

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

 

63,575

 

(99,145)

Net increase (decrease) in cash and cash equivalents from continuing operations

 

44,667

 

(465,943)

Cash and cash equivalents at beginning of period

 

115,752

 

1,144,450

Cash and cash equivalents at end of period

$

160,419

$

678,507

Supplemental cash flow data:

Non-cash investing activities:

Assets acquired under finance leases and deferred financing obligations

$

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, 2021

(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, 2021 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 December 31, 2020, Magellan completed the sale of its Magellan Complete Care business (the “MCC Business”) to Molina Healthcare, Inc. (“Molina”), pursuant to a Stock and Asset Purchase Agreement, dated as of April 30, 2020, by and between the Company and Molina, for cash in the amount of $850 million plus closing adjustments of $158 million (subject to post-closing adjustments, if any), and the assumption by Molina of liabilities of the MCC Business (the “MCC Sale”). The MCC Business was the Company’s business of contracting with state Medicaid agencies and the U.S. Centers for Medicare and Medicaid Services to manage total medical benefits or long-term support services for Medicaid and dual eligible Medicaid and Medicare populations.

On January 4, 2021, the Company and Centene Corporation (“Centene”) entered into an Agreement of Plan of Merger (the “Merger Agreement”) by and among the Company, Centene, and Mayflower Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Centene (“Merger Sub”), pursuant to which, subject to the terms and conditions set forth therein, Merger Sub will merge with and into the Company, with the Company surviving such merger (the “Merger”) as a wholly-owned subsidiary of Centene. Pursuant to the Merger Agreement, each issued and outstanding share of the Company’s common stock will be automatically canceled and converted into the right to receive $95.00 in cash. The Company expects to complete the transaction in the second half of 2021.

The Merger has been approved by the Company’s board of directors, the Company’s stockholders and Centene’s board of directors. The completion of the Merger is subject to customary closing conditions, including, among others, the receipt of various regulatory approvals. For additional information on the Merger Agreement and the Merger, please refer to the Company’s Current Reports on Forms 8-K, filed with the SEC on January 4, 2021 and March 31, 2021, and our definitive proxy statement filed with the SEC on February 19, 2021 (the “Proxy Statement”). The Company cannot guarantee that the Merger will be completed on a timely basis or at all or that, if completed, it will be completed on the terms set forth in the Merger Agreement.

These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2020 and the notes thereto, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on February 26, 2021.

Business Overview

The Company provides managed care and pharmacy solutions 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.

6

Table of Contents

MAGELLAN HEALTH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2021

(Unaudited)

Healthcare Segment

The Healthcare Segment (“Healthcare”) 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 segment also includes Magellan’s carve-out behavioral health contracts with various state Medicaid agencies, as well as certain provider assets that deliver primary care and behavioral healthcare services through an integrated approach.

Magellan’s coordination and management of these healthcare 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. In addition to the Company’s provider assets where it provides treatment services in certain geographies, the Company also employs 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 per member per month (“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 Segment

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, 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, including through integrated Pharmacy Management and Healthcare service offerings.

Pharmacy Management contracts with its customers for services using risk-based, gain share or ASO arrangements. In addition, Pharmacy Management provides services 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. Any activity related to Medicare Part D business reflected in the six months ended June 30, 2021 is related to final run-out of the 2020 Part D contract provision and is included in continuing operations. The Company continues to retain its Medicare Employer Group Waiver Plan as well as full capabilities to serve the PBM needs of its existing and prospective Medicare customers.

7

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MAGELLAN HEALTH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2021

(Unaudited)

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 December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 was effective for the Company beginning in the first quarter of 2021. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures.

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 Accounting Standard Codification 606 (“ASC 606”) which are explained in more detail in “Revenue Recognition” below. Actual results could differ from those estimates.

8

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MAGELLAN HEALTH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2021

(Unaudited)

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, 2020 and 2021 by major service line, type of customer and timing of revenue recognition (in thousands):

Three Months Ended June 30, 2020

Healthcare

    

Pharmacy Management

    

Elimination

    

Total

Major Service Lines

Behavioral & Specialty Health

Risk-based, non-EAP

$

344,199

$

$

(92)

$

344,107

EAP risk-based

77,419

77,419

ASO

59,403

12,271

(85)

71,589

PBM, including dispensing

499,484

(4,831)

494,653

Medicare Part D

56,711

56,711

PBA

30,811

30,811

Formulary management

25,061

25,061

Other

(276)

(276)

Total net revenue

$

481,021

$

624,062

$

(5,008)

$

1,100,075

Type of Customer