Document and Entity Information
Document and Entity Information - Jun. 30, 2015 - shares | Total |
Document and Entity Information | |
Entity Registrant Name | MAGELLAN HEALTH INC |
Entity Central Index Key | 19,411 |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2015 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 27,012,279 |
Document Fiscal Year Focus | 2,015 |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Cash and cash equivalents | $ 167,826 | $ 255,303 |
Restricted cash | 131,321 | 215,325 |
Accounts receivable, less allowance for doubtful accounts of $4,047 and $3,587 at December 31, 2014 and June 30, 2015, respectively | 407,984 | 353,713 |
Short-term investments (restricted investments of $132,808 and $209,537 at December 31, 2014 and June 30, 2015, respectively) | 312,306 | 224,361 |
Deferred income taxes | 26,476 | 27,226 |
Pharmaceutical inventory | 42,294 | 39,375 |
Other current assets (restricted deposits of $30,620 and $27,030 at December 31, 2014 and June 30, 2015, respectively) | 81,634 | 52,246 |
Total Current Assets | 1,169,841 | 1,167,549 |
Property and equipment, net | 177,366 | 171,916 |
Restricted long-term investments | 29,731 | 43,293 |
Other long-term assets | 13,632 | 11,575 |
Goodwill | 623,827 | 566,106 |
Other intangible assets, net | 149,113 | 133,718 |
Total Assets | 2,163,510 | 2,094,157 |
Current Liabilities: | ||
Accounts payable | 58,003 | 63,929 |
Accrued liabilities | 159,132 | 154,931 |
Medical claims payable | 255,524 | 278,482 |
Other medical liabilities | 141,221 | 72,719 |
Current maturities of long-term debt and capital lease obligations | 15,959 | 15,779 |
Total Current Liabilities | 629,839 | 585,840 |
Long-term debt and capital lease obligations | 249,264 | 255,742 |
Deferred income taxes | 27,250 | 30,950 |
Tax contingencies | 11,368 | 12,320 |
Contingent consideration | 63,542 | 49,839 |
Deferred credits and other long-term liabilities | 19,574 | 19,951 |
Total Liabilities | 1,000,837 | 954,642 |
Redeemable Non-controlling interest | $ 8,198 | $ 5,957 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, par value $.01 per share Authorized-10,000 shares at December 31, 2014 and June 30, 2015 - Issued and outstanding-none | ||
Other Stockholders' Equity: | ||
Additional paid-in capital | $ 1,095,772 | $ 1,018,266 |
Retained earnings | 1,191,828 | 1,179,897 |
Accumulated other comprehensive loss | (167) | (143) |
Ordinary common stock in treasury, at cost, 23,150 shares and 24,212 shares at December 31, 2014 and June 30, 2015, respectively | (1,133,470) | (1,064,963) |
Total Stockholders' Equity | 1,154,475 | 1,133,558 |
Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' Equity | 2,163,510 | 2,094,157 |
Ordinary common stock | ||
STOCKHOLDERS' EQUITY | ||
Common stock | $ 512 | $ 501 |
Multi-Vote common stock | ||
STOCKHOLDERS' EQUITY | ||
Common stock |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 3,587 | $ 4,047 |
Short-term restricted investments (in dollars) | 209,537 | 132,808 |
Other current assets, restricted deposits (in dollars) | $ 27,030 | $ 30,620 |
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 |
Ordinary common stock in treasury, shares | 24,212 | 23,150 |
Ordinary common stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, Authorized shares | 100,000 | 100,000 |
Common stock, Issued shares | 51,224 | 50,085 |
Common stock, outstanding shares | 27,012 | 26,935 |
Multi-Vote common stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, Authorized shares | 40,000 | 40,000 |
Common stock, Issued shares | 0 | 0 |
Common stock, outstanding shares | 0 | 0 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Net revenue: | ||||
Managed care and other | $ 776,240 | $ 682,274 | $ 1,524,890 | $ 1,511,865 |
PBM and dispensing | 381,367 | 205,740 | 613,685 | 342,624 |
Total net revenue | 1,157,607 | 888,014 | 2,138,575 | 1,854,489 |
Cost and expenses: | ||||
Cost of care | 568,288 | 481,617 | 1,090,616 | 1,087,325 |
Cost of goods sold | 361,409 | 192,566 | 579,616 | 317,864 |
Direct service costs and other operating expenses (1) (2) | 191,455 | 179,034 | 395,905 | 343,756 |
Depreciation and amortization | 25,022 | 22,480 | 48,518 | 42,709 |
Interest expense | 1,653 | 2,004 | 3,279 | 2,840 |
Interest income | (500) | (275) | (966) | (586) |
Total costs and expenses | 1,147,327 | 877,426 | 2,116,968 | 1,793,908 |
Income before income taxes | 10,280 | 10,588 | 21,607 | 60,581 |
Provision for income taxes | 5,987 | 6,261 | 10,120 | 31,874 |
Net income | 4,293 | 4,327 | 11,487 | 28,707 |
Less: net income (loss) attributable to non-controlling interest | (350) | (659) | (444) | (1,999) |
Net income attributable to Magellan Health, Inc. | $ 4,643 | $ 4,986 | $ 11,931 | $ 30,706 |
Net income per common share attributable to Magellan Health, Inc.: | ||||
Basic (in dollars per share) | $ 0.18 | $ 0.18 | $ 0.47 | $ 1.13 |
Diluted (in dollars per share) | $ 0.17 | $ 0.18 | $ 0.45 | $ 1.10 |
CONSOLIDATED STATEMENTS OF INC5
CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
CONSOLIDATED STATEMENTS OF INCOME | ||||
Stock compensation expense | $ 13,795 | $ 9,550 | $ 27,696 | $ 14,022 |
Changes in fair value of contingent consideration | $ 2,567 | $ 17,536 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 4,293 | $ 4,327 | $ 11,487 | $ 28,707 |
Other comprehensive income: | ||||
Unrealized gains (losses) on available-for-sale securities | (93) | 70 | (24) | 113 |
Comprehensive income | 4,200 | 4,397 | 11,463 | 28,820 |
Less: comprehensive income (loss) attributable to non-controlling interest | (350) | (659) | (444) | (1,999) |
Comprehensive income attributable to Magellan Health, Inc. | $ 4,550 | $ 5,056 | $ 11,907 | $ 30,819 |
CONSOLIDATED STATEMENTS OF COM7
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net of income tax provision (benefit) | $ (48) | $ 46 | $ (2) | $ 75 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities: | ||
Net income | $ 11,487 | $ 28,707 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 48,518 | 42,709 |
Non-cash interest expense | 197 | 1,572 |
Non-cash stock compensation expense | 27,696 | 14,022 |
Non-cash income tax benefit | (3,323) | (1,558) |
Non-cash amortization on investments | 2,966 | 2,653 |
Cash flows from changes in assets and liabilities, net of effects from acquisitions of businesses: | ||
Restricted cash | 84,004 | 69,383 |
Accounts receivable, net | (32,064) | (15,752) |
Pharmaceutical inventory | (2,919) | 5,332 |
Other assets | (31,551) | (27,675) |
Accounts payable and accrued liabilities | (49,898) | (5,434) |
Medical claims payable and other medical liabilities | 45,544 | 18,657 |
Tax contingencies | (578) | 1,164 |
Deferred credits and other long-term liabilities | 12,645 | 3,366 |
Other | (48) | (95) |
Net cash provided by operating activities | 112,676 | 137,051 |
Cash flows from investing activities: | ||
Capital expenditures | (37,653) | (32,007) |
Acquisitions and investments in businesses, net of cash acquired | (55,943) | (124,995) |
Purchase of investments | (293,348) | (112,088) |
Maturity of investments | 215,984 | 146,532 |
Net cash used in investing activities | (170,960) | (122,558) |
Cash flows from financing activities: | ||
Payments to acquire treasury stock | (68,783) | (65,254) |
Proceeds from exercise of stock options and warrants | 49,170 | 34,197 |
Payments on long-term debt and capital lease obligations | (8,299) | (2,087) |
Payments on contingent consideration | (4,439) | |
Tax benefit from exercise of stock options and vesting of stock awards | 3,774 | 2,384 |
Other | (616) | (1,143) |
Net cash used in provided by financing activities | (29,193) | (31,903) |
Net decrease in cash and cash equivalents | (87,477) | (17,410) |
Cash and cash equivalents at beginning of period | 255,303 | 203,187 |
Cash and cash equivalents at end of period | 167,826 | 185,777 |
Non-cash investing activities: | ||
Property and equipment acquired under capital leases | $ 1,987 | $ 216 |
General
General | 6 Months Ended |
Jun. 30, 2015 | |
General | |
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, 2015 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. The Company has evaluated subsequent events for recognition or disclosure in the consolidated financial statements filed on this Form 10-Q and no events occurred that require disclosure. These unaudited consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2014 and the notes thereto, which are included in the Company's Annual Report on Form 10-K filed with the SEC on February 26, 2015. Business Overview The Company is engaged in the healthcare management business, and is focused on meeting needs in areas of healthcare that are fast growing, highly complex and high cost, with an emphasis on special population management. The Company provides services to health plans and other managed care organizations ("MCOs"), employers, labor unions, various military and governmental agencies, third party administrators, consultants and brokers. The Company's business is divided into the following five segments, based on the services it provides and/or the customers that it serves, as described below. Managed Healthcare Two of the Company's segments are in the managed healthcare business. This line of business reflects the Company's: (i) management of behavioral healthcare services, and (ii) the integrated management of physical, behavioral and pharmaceutical healthcare for special populations, delivered through Magellan Complete Care ("MCC"). The Company's coordination and management of physical and behavioral healthcare includes services provided through its comprehensive network of medical and behavioral health professionals, clinics, hospitals and ancillary service providers. This network of credentialed and privileged providers is integrated with clinical and quality improvement programs to enhance the healthcare experience for individuals in need of care, while at the same time managing the cost of these services for our customers. The treatment services provided through the Company's provider network include outpatient programs, intermediate care programs, inpatient treatment and crisis intervention services. 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's integrated management of physical and behavioral healthcare includes full service health plans which provide for the holistic management of special populations. These special populations include individuals with serious mental illness, dual eligibles, those eligible for long term care and other populations with unique and often complex healthcare needs. The Company provides its 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 per member per month fee, (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 responsibility for the cost of the treatment services, and (iii) employee assistance programs ("EAPs") where the Company provides short-term outpatient behavioral counseling services. The managed healthcare business includes the following two segments, which are differentiated based on the services provided and/or the customers served: Commercial. The Managed Healthcare Commercial segment ("Commercial") generally reflects managed behavioral healthcare services and EAP services provided under contracts with health plans and other MCOs for some or all of their commercial, Medicaid and Medicare members, as well as with employers, including corporations, governmental agencies, military and labor unions. Commercial's contracts encompass risk-based, ASO and EAP arrangements. As of June 30, 2015, Commercial's covered lives were 2.6 million, 12.7 million and 13.4 million for risk-based, ASO and EAP products, respectively. For the six months ended June 30, 2015, Commercial's revenue was $138.8 million, $62.1 million and $102.3 million for risk-based, ASO and EAP products, respectively. Public Sector. The Managed Healthcare Public Sector segment ("Public Sector") generally reflects: (i) the management of behavioral healthcare services provided to recipients under Medicaid and other state sponsored programs under contracts with state and local governmental agencies, and (ii) the integrated management of physical, behavioral and pharmaceutical care for special populations covered under Medicaid and other government sponsored programs. Public Sector contracts encompass either risk-based or ASO arrangements. As of June 30, 2015, Public Sector's covered lives were 1.5 million and 1.8 million for risk-based and ASO products, respectively. For the six months ended June 30, 2015, Public Sector's revenue was $832.5 million and $30.3 million for risk-based and ASO products, respectively. Specialty Solutions The Specialty Solutions segment ("Specialty Solutions") generally reflects the management of the delivery of diagnostic imaging (radiology benefits management or "RBM") and a variety of other specialty areas such as radiation oncology, obstetrical ultrasound, cardiology and musculoskeletal management to ensure that such services are clinically appropriate and cost effective. The Company's Specialty Solutions services are currently provided under contracts with health plans and other MCOs for some or all of their commercial, Medicaid and Medicare members. The Company also contracts with state and local governmental agencies for the provision of such services to Medicaid recipients. The Company offers its Specialty Solutions services through risk-based contracts, where the Company assumes all or a substantial portion of the responsibility for the cost of providing services, and through ASO contracts, where the Company provides services such as utilization review and claims administration, but does not assume responsibility for the cost of the services. As of June 30, 2015, covered lives for Specialty Solutions were 7.4 million and 16.2 million for risk-based and ASO products, respectively. For the six months ended June 30, 2015, revenue for Specialty Solutions was $228.4 million and $28.2 million for risk-based and ASO products, respectively. Pharmacy Management The Pharmacy Management segment ("Pharmacy Management") comprises products and solutions that provide clinical and financial management of drugs paid under medical and pharmacy benefit programs. Pharmacy Management's services include: (i) traditional pharmacy benefit management ("PBM") services; (ii) pharmacy benefit administration ("PBA") for state Medicaid and other government sponsored programs; (iii) specialty pharmaceutical dispensing operations, contracting and formulary optimization 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. In addition, Pharmacy Management has subcontract arrangements to provide PBM services for certain Public Sector customers. The Company's Pharmacy Management programs are provided under contracts with health plans, employers, Medicaid MCOs, state Medicaid programs, and other government agencies, and encompass risk-based and fee-for-service ("FFS") arrangements. During the six months ended June 30, 2015, Pharmacy Management paid 8.1 million adjusted commercial network claims in the Company's PBM business. As of June 30, 2015, the Company had a generic dispensing rate of 84.0 percent within its commercial PBM business. In addition, during the six months ended June 30, 2015, the Company paid 29.5 million adjusted PBA claims and 52.4 thousand specialty dispensing claims. Adjusted claim totals apply a multiple of three for each 90-day and traditional mail claim. In addition, as of June 30, 2015, Pharmacy Management served 1.6 million commercial PBM members, 10.0 million members in its medical pharmacy management programs, and 25 states and the District of Columbia in its PBA business. Corporate This segment of the Company is comprised primarily of operational support functions such as sales and marketing and information technology, as well as corporate support functions such as executive, finance, human resources and legal. Summary of Significant Accounting Policies Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers (Topic 606)" ("ASU 2014-09"), which is a new comprehensive revenue recognition standard that will supersede virtually all existing revenue guidance under GAAP. In July 2015, the FASB approved to defer the effective date of ASU 2014-09. This ASU is now effective for calendar years beginning after December 15, 2017. 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 June 2014, the FASB issued ASU No. 2014-12, "Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period" ("ASU 2014-12"), which revises the accounting treatment for stock compensation tied to performance targets. This ASU is effective for calendar years beginning after December 15, 2015. The guidance is not expected to materially impact the Company's consolidated results of operations, financial position, or cash flows. In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements—Going Concern (Subtopic 205-40)" ("ASU 2014- 15"), which provides guidance in GAAP about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. This amendment should reduce diversity in the timing and content of footnote disclosures. This ASU is effective for the annual period beginning after December 15, 2016 and for annual and interim periods thereafter. The guidance is not expected to materially impact the Company's consolidated results of operations, financial position, or cash flows. In February 2015, the FASB issued ASU No. 2015-02, "Amendments to the Consolidation Analysis" ("ASU 2015-02"), which amends certain requirements for determining whether a variable interest entity must be consolidated. The amendments are effective for annual and interim reporting periods of public entities beginning after December 31, 2015. The guidance is not expected to materially impact the Company's consolidated results of operations, financial position, or cash flows. In April 2015, the FASB issued ASU No. 2015-03, "Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"). The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This guidance is effective for annual and interim reporting periods of public entities beginning after December 15, 2015. The guidance is not expected to materially impact the Company's consolidated results of operations, financial position, or cash flows. In April 2015, the FASB issued ASU No. 2015-05, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement" ("ASU 2015-05"), which provides guidance to clarify the customer's accounting for fees paid in a cloud computing arrangement. This guidance is effective for annual periods and interim reporting periods of public entities beginning after December 15, 2015. The guidance is not expected to materially impact the Company's consolidated results of operations, financial position, or 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 include, among other things, accounts receivable realization, valuation allowances for deferred tax assets, valuation of goodwill and intangible assets, medical claims payable, other medical liabilities, contingent consideration, stock compensation assumptions, tax contingencies and legal liabilities. Actual results could differ from those estimates. Managed Care and Other Revenue Managed Care Revenue. Managed care revenue, inclusive of revenue from the Company's risk, EAP and ASO contracts, is recognized over the applicable coverage period on a per member basis for covered members. The Company is paid a per member fee for all enrolled members, and this fee is recorded as revenue in the month in which members are entitled to service. The Company adjusts its revenue for retroactive membership terminations, additions and other changes, when such adjustments are identified, with the exception of retroactivity that can be reasonably estimated. The impact of retroactive rate amendments is generally recorded in the accounting period that terms to the amendment are finalized, and that the amendment is executed. Any fees paid prior to the month of service are recorded as deferred revenue. Managed care revenues approximated $595.1 million and $1,323.9 million for the three and six months ended June 30, 2014, respectively, and $668.6 million and $1,314.9 million for the three and six months ended June 30, 2015, respectively. Fee-For-Service and Cost-Plus Contracts. The Company has certain fee-for-service contracts, including cost-plus contracts, with customers under which the Company recognizes revenue as services are performed and as costs are incurred. This includes revenues received in relation to Patient Protection and Affordable Care Act ("ACA") fees billed on a cost reimbursement basis. Revenues from these contracts approximated $73.0 million and $132.7 million for the three and six months ended June 30, 2014, respectively, and $84.6 million and $163.6 million for the three and six months ended June 30, 2015, respectively. Block Grant Revenues. The Maricopa Contract (as defined below) was partially funded by federal, state and county block grant money, which represented annual appropriations. The Company recognized revenue from block grant activity ratably over the period to which the block grant funding applied. Block grant revenues were approximately $0.0 million and $33.0 million for the three and six months ended June 30, 2014, respectively. The Maricopa Contract terminated on March 31, 2014. Performance-Based Revenue. The Company has the ability to earn performance-based revenue under certain risk and non-risk contracts. Performance-based revenue generally is based on either the ability of the Company to manage care for its clients below specified targets, or on other operating metrics. For each such contract, the Company estimates and records performance-based revenue after considering the relevant contractual terms and the data available for the performance-based revenue calculation. Pro-rata performance-based revenue may be recognized on an interim basis pursuant to the rights and obligations of each party upon termination of the contracts. Performance-based revenues approximated $2.4 million and $5.4 million, respectively, for the three and six months ended June 30, 2014, respectively, and $1.1 million and $5.7 million for the three and six months ended June 30, 2015, respectively. Rebate Revenue. The Company administers a rebate program 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. Each period, the Company estimates the total rebates earned based on actual volumes of pharmaceutical purchases by the Company's clients, as well as historical and/or anticipated sharing percentages. The Company earns fees based upon the volume of rebates generated for its clients. The Company does not record as rebate revenue any rebates that are passed through to its clients. Total rebate revenues approximated $9.2 million and $13.3 million for the three and six months ended June 30, 2014, respectively, and $16.9 million and $32.8 million for the three and six months ended June 30, 2015, respectively. 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. PBM and Dispensing Revenue Pharmacy Benefit Management Revenue. The Company recognizes PBM revenue, which consists of a negotiated prescription price (ingredient cost plus dispensing fee), co-payments collected by the pharmacy and any associated administrative fees, when claims are adjudicated. 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 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. PBM revenues approximated $146.3 million and $227.5 million for the three and six months ended June 30, 2014 and $330.0 million and $515.8 million for the three and six months ended June 30, 2015, respectively. Dispensing Revenue. The Company recognizes dispensing revenue, which includes the co-payments received from members of the health plans the Company serves, when the specialty pharmaceutical drugs are shipped. 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. Revenues from the dispensing of specialty pharmaceutical drugs on behalf of health plans were $59.4 million and $115.1 million for the three and six months ended June 30, 2014 and $51.4 million and $97.9 million for the three and six months ended June 30, 2015, respectively. Significant Customers Customers exceeding ten percent of the consolidated Company's net revenues The Company provides behavioral healthcare management and other related services to members in the state of Iowa pursuant to contracts with the State of Iowa (the "Iowa Contracts"). The Company currently has two contracts; the Iowa Medicaid Contract and Iowa Medicaid Integrated Health Home Provider Agreement ("IHH Agreement"). Under the Iowa Medicaid Contract, the Company is responsible for providing managed mental health and substance abuse treatment to enrollees under a Medicaid 1915(b) waiver, as well as substance abuse treatment services plan funded by federal block grant and state appropriations under the authority of the Iowa Department of Public Health. The Iowa Health and Wellness Plan for members who qualify as an "exempt individual", as defined in 441 of the Iowa Administrative Code, were also added to the contract on January 1, 2014. The latest Iowa Medicaid Contract began on January 1, 2010 and extended through June 30, 2015. The Iowa Department of Human Services and the Iowa Department of Public Health has the right to terminate the Iowa Medicaid Contract upon 30 days notice for any reason or no reason at all. In June 2015, the Company received a notice of intent to extend the Iowa Medicaid Contract through December 31, 2015, to coincide with the start date of the new Iowa High Quality Healthcare Initiative, as discussed below. Under the IHH Agreement, the Company establishes a health home for individuals identified with serious and persistent mental illness through enrolled provider organizations capable of providing enhanced care. The IHH Agreement began on July 1, 2013 and extends through June 30, 2016 unless sooner terminated by either party with 60 days notice for any reason or no reason at all. The IHH program is part of the new Iowa High Quality Healthcare Initiative and we expect that the end of the IHH agreement will coincide with the start date of the new initiative. The Iowa Contracts generated net revenues of $213.0 million and $261.9 million for the six months ended June 30, 2014 and 2015, respectively. On February 16, 2015 the Iowa Department of Human Services (the "Agency") released the Iowa High Quality Healthcare Initiative Request for Proposal ("RFP"). The Agency intends to contract on a statewide basis with two to four successful bidders with a demonstrated capacity to coordinate care and provide quality outcomes for the Medicaid and Children's Health Insurance Program ("CHIP") populations. The program will enroll the majority of the Iowa Medicaid and CHIP populations and will also provide services for individuals qualifying for Iowa Department of Public Health ("IDPH") funded substance abuse services. The anticipated start of the contract is January 1, 2016 for an initial period of three years and the ability for the Agency to extend the contract for two additional two year terms. The RFP includes the services provided by the Company's current Iowa Contracts. The Company has submitted a bid on this RFP. There can be no assurance that the Company will be awarded a contract pursuant to the RFP, or that the terms of any contract awarded pursuant to the RFP will be similar to the current Iowa Contracts. The Company provides behavioral healthcare management and other related services to members in the state of Florida pursuant to contracts with the State of Florida (the "Florida Contracts"). The Company had behavioral healthcare contracts with various areas in the State of Florida (the "Florida Areas") which were part of the Florida Medicaid program. The State of Florida implemented a new system of mandated managed care through which Medicaid enrollees receive integrated healthcare services, and in 2014 phased out the behavioral healthcare programs under which the Florida Areas' contracts operated. The Company has a contract with the State of Florida to provide integrated healthcare services under the new program ("the Florida Medicaid Contract"). The Florida Medicaid Contract began on February 4, 2014 and extends through December 31, 2018, unless sooner terminated by the parties. The State of Florida has the right to terminate the Florida Medicaid Contract with cause, as defined, upon 24 hour notice and upon 30 days notice for any reason or no reason at all. The Florida Contracts generated net revenues of $57.4 million and $218.0 million for the six months ended June, 2014 and 2015, respectively. Through March 31, 2014, the Company provided behavioral healthcare management and other related services to approximately 680,000 members in Maricopa County, Arizona as the Regional Behavioral Health Authority ("RBHA") for GSA6 ("Maricopa County") pursuant to a contract with the State of Arizona (the "Maricopa Contract"). The Maricopa Contract was for the management of the publicly funded behavioral health system that delivered mental health, substance abuse and crisis services for adults, youth, and children. The Maricopa Contract terminated on March 31, 2014. The Maricopa Contract generated net revenues of $209.5 million for the six months ended June 30, 2014. Customers exceeding ten percent of segment net revenues In addition to the Iowa Contracts, the Florida Contracts, and the Maricopa 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, 2014 and 2015 (in thousands): Segment Term Date 2014 2015 Commercial Customer A June 30, 2014(1) $ $ — Customer B December 31, 2019 Customer C August 14, 2017 Public Sector None Specialty Solutions Customer A November 30, 2016 Customer D December 31, 2017(2) Customer E June 30, 2016(3) * Customer F June 30, 2017 Customer G January 31, 2016 Customer H April 1, 2017 to October 1, 2017 * Pharmacy Management Customer I November 30, 2015 to April 4, 2016(4) * Customer J December 16, 2016 * Revenue amount did not exceed ten percent of net revenues for the respective segment for the period presented. Amount is shown for comparative purposes only. (1) The contract has terminated. (2) On December 31, 2014, this contract was amended and extended through December 31, 2017. Historically the Company provided services on a risk basis. Under the amended contract, the funding arrangement is a combination of risk and ASO based services. (3) The contract transitioned from risk to ASO based services effective July 1, 2014. (4) The customer has more than one contract. The individual contracts are scheduled to terminate at various points during the time period indicated above. 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. Net revenues from the Pennsylvania Counties in the aggregate totaled $179.0 million and $186.1 million for the six months ended June 30, 2014 and 2015, respectively. The Company's contracts with customers typically have 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 60 and 180 days) or upon the occurrence of other specified events. In addition, the Company's contracts with federal, state and local governmental agencies generally are conditioned on legislative appropriations. These contracts generally can be terminated or modified by the customer if such appropriations are not made. 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, 2014 and June 30, 2015 (in thousands): December 31, 2014 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents(1) $ — $ $ — $ Restricted cash(2) — — Investments: U.S. government and agency securities — — Obligations of government-sponsored enterprises(3) — — Corporate debt securities — — Certificates of deposit — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets held at fair value $ $ $ — $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities Contingent consideration $ — $ — $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities held at fair value $ — $ — $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2015 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents(4) $ — $ $ — $ Restricted cash(5) — — Investments: U.S. government and agency securities — — Obligations of government-sponsored enterprises(3) — — Corporate debt securities — — Certificates of deposit — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets held at fair value $ $ $ — $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities Contingent consideration $ — $ — $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities held at fair value $ — $ — $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Excludes $116.0 million of cash held in bank accounts by the Company. (2) Excludes $149.3 million of restricted cash held in bank accounts by the Company. (3) Includes investments in notes issued by the Federal Home Loan Bank. (4) Excludes $95.3 million of cash held in bank accounts by the Company. (5) Excludes $88.8 million of restricted cash held in bank accounts by the Company. For the six months ended June 30, 2015, the Company has not transferred any assets between fair value measurement levels. The carrying values of financial instruments, including accounts receivable and accounts payable, approximate their fair values due to their short-term maturities. The estimated fair value of the Company's term loan of $240.6 million as of June 30, 2015 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. The contingent consideration liability reflects the fair value of potential future payments related to the CDMI, LLC ("CDMI"), Cobalt Therapeutics, LLC ("Cobalt"), and 4D Pharmacy Management Systems, Inc. ("4D") acquisitions. The CDMI purchase agreement provides for potential contingent payments up to a maximum aggregate amount of $165.0 million. The potential future payments are contingent upon CDMI meeting certain client retention, client conversion, and gross profit milestones through December 31, 2016. The |
Net Income per Common Share Att
Net Income per Common Share Attributable to Magellan Health, Inc. | 6 Months Ended |
Jun. 30, 2015 | |
Net Income per Common Share Attributable to Magellan Health, Inc. | |
Net Income per Common Share Attributable to Magellan Health, Inc. | NOTE B—Net Income per Common Share Attributable to Magellan Health, Inc. The following tables reconcile 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): Three Months Ended June 30, Six Months Ended June 30, 2014 2015 2014 2015 Numerator: Net income attributable to Magellan Health, Inc. $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator: Weighted average number of common shares outstanding—basic Common stock equivalents—stock options Common stock equivalents—RSAs Common stock equivalents—RSUs — Common stock equivalents—PSUs — — Common stock equivalents—employee stock purchase plan ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average number of common shares outstanding—diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income attributable to Magellan Health, Inc. per common share—basic $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income attributable to Magellan Health, Inc. per common share—diluted $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The weighted average number of common shares outstanding for the three and six months ended June 30, 2014 and 2015 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 months ended June 30, 2014 and 2015 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 0.7 million and 0.5 million options for the three and six months ended June 30, 2014, respectively, and 0.8 million and 0.9 million options for the three and six months ended June 30, 2015, 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, 2015 | |
Business Segment Information | |
Business Segment Information | NOTE C—Business Segment Information The accounting policies of the Company's segments are the same as those described in Note 1—"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. Public Sector subcontracts with Pharmacy Management and Specialty Solutions to provide pharmacy benefits management services and radiology benefits management services for certain of Public Sector'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 care, cost of goods sold and direct service costs and other related to these arrangements are eliminated. The Company's segments are defined above. The following tables summarize, for the periods indicated, operating results by business segment (in thousands): Commercial Public Sector Specialty Solutions Pharmacy Management Corporate and Elimination Consolidated Three Months Ended June 30, 2014 Managed care and other revenue $ $ $ $ $ — $ PBM and dispensing revenue — — — ) Cost of care ) ) ) — ) Cost of goods sold — — — ) ) Direct service costs and other ) ) ) ) ) ) Stock compensation expense(1) Less: non-controlling interest segment profit (loss)(2) — ) — — — ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment profit (loss) $ $ $ $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Public Sector Specialty Solutions Pharmacy Management Corporate and Elimination Consolidated Three Months Ended June 30, 2015 Managed care and other revenue $ $ $ $ $ ) $ PBM and dispensing revenue — — — ) Cost of care ) ) ) — — ) Cost of goods sold — — — ) ) Direct service costs and other ) ) ) ) ) ) Stock compensation expense(1) Changes in fair value of contingent consideration(1) — — — Less: non-controlling interest segment profit (loss)(2) — ) — — ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment profit (loss) $ $ $ $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Public Sector Specialty Solutions Pharmacy Management Corporate and Elimination Consolidated Six Months Ended June 30, 2014 Managed care and other revenue $ $ $ $ $ ) $ PBM and dispensing revenue — — — ) Cost of care ) ) ) ) ) Cost of goods sold — — — ) ) Direct service costs and other ) ) ) ) ) ) Stock compensation expense(1) Less: non-controlling interest segment profit (loss)(2) — ) — — — ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment profit (loss) $ $ $ $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Public Sector Specialty Solutions Pharmacy Management Corporate and Elimination Consolidated Six Months Ended June 30, 2015 Managed care and other revenue $ $ $ $ $ ) $ PBM and dispensing revenue — — — ) Cost of care ) ) ) — ) Cost of goods sold — — — ) ) Direct service costs and other ) ) ) ) ) ) Stock compensation expense(1) Changes in fair value of contingent consideration(1) — — — Less: non-controlling interest segment profit (loss)(2) — ) — — ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment profit (loss) $ $ $ $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Stock compensation expense, as well as changes in the fair value of contingent consideration recorded in relation to the acquisitions, are included in direct service costs and other operating expenses; however, these amounts are excluded from the computation of Segment Profit. (2) The non-controlling portion of AlphaCare's segment profit (loss) is excluded from the computation of Segment Profit. The following table reconciles Segment Profit to income before income taxes (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2014 2015 2014 2015 Segment profit $ $ $ $ Stock compensation expense ) ) ) ) Changes in fair value of contingent consideration — ) — ) Non-controlling interest segment profit (loss) ) ) ) ) Depreciation and amortization ) ) ) ) Interest expense ) ) ) ) Interest income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income taxes $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies | |
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. In the opinion of management, the Company has recorded reserves that 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. Stock Repurchases On October 22, 2014 the Company's board of directors approved a new stock repurchase plan which authorized the Company to purchase up to $200 million of its outstanding common stock through October 22, 2016. Stock repurchases under the program may be purchased 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 this program, the Company made open market purchases as follows (aggregate cost excludes broker commissions and is reflected in millions): Period Total Number of Shares Purchased Average Price Paid per Share Aggregate Cost November 24, 2014 - December 31, 2014 $ $ January 1, 2015 - June 30, 2015 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ During the period from July 1, 2015 through July 22, 2015, the Company made additional open market purchases of 113,160 shares of the Company's common stock at an aggregate cost of $7.8 million (excluding broker commissions). |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2015 | |
Acquisitions | |
Acquisitions | NOTE E—Acquisitions Acquisition of 4D Pharmacy Management Systems, Inc. Pursuant to the March 17, 2015 Purchase Agreement (the "4D Agreement") with 4D Pharmacy Management Systems, Inc. ("4D"), on April 1, 2015 the Company acquired (the "4D Acquisition") all of the outstanding equity interests of 4D. 4D is a privately held, full-service PBM serving managed care organizations, employers and government-sponsored benefit programs, such as Medicare Part D plans. As consideration for the 4D Acquisition, the Company paid $55 million in cash, subject to working capital adjustments. There are additional potential contingent payments up to an aggregate amount of $30 million. The contingent payment provisions provide for (i) cash payments of up to $10 million based on the achievement of certain growth targets in the underlying dual eligible membership served by 4D during calendar year 2015 and (ii) cash payments of up to $20 million for retention of certain business through 2018. The Company funded the 4D Acquisition with cash on hand. The Company reports the results of operations of 4D within its Pharmacy Management segment. The purchase price has been allocated based upon the estimated fair value of net assets acquired at the date of acquisition. A portion of the excess purchase price over tangible net assets acquired has been allocated to identified intangible assets totaling $24.6 million, consisting of customer contracts in the amount of $21.1 million, which is being amortized over 10 years, non-compete agreements in the amount of $2.2 million, which is being amortized over 5 years and tradename in the amount of $1.3 million, which is being amortized over 18 months. The entire excess purchase price over tangible net assets acquired is amortizable for tax purposes, although the Company's effective rate will not be impacted by the tax amortization. The estimated fair values of 4D assets acquired and liabilities assumed at the date of acquisition are summarized as follows (in thousands): Assets acquired: Current assets (includes $14,178 of cash and $21,400 of accounts receivable) $ Property and equipment, net Other identified intangible assets Goodwill ​ ​ ​ ​ ​ Total assets acquired ​ ​ ​ ​ ​ Liabilities assumed: Current liabilities Contingent consideration ​ ​ ​ ​ ​ Total liabilities assumed ​ ​ ​ ​ ​ Net assets acquired $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, 2015, the Company established a working capital payable of $0.3 million that was reflected as an increase to goodwill. The fair value of contingent consideration is determined based on probabilities of payment, projected payment dates, discount rates, projected membership, and projected client base. The projected membership and client base are derived from the Company's latest internal operational forecasts and assumptions. The Company used a probability weighted discounted cash flow method to arrive at the fair value of the contingent consideration. Changes in the operational forecasts, probabilities of payment, discount rates, or projected payment dates may result in change in the fair value measurement. Any changes in the fair value measurement are reflected as income or expense in the consolidated statements of income. The Company estimated undiscounted future contingent payments of $20.6 million and $17.0 million as of the acquisition date and June 30, 2015, respectively. The net $3.6 million decrease was due to a payment of $5.0 million, partially offset by a net increase of $1.4 million, mainly due to changes in probabilities of payment. As of June 30, 2015, the fair value of the contingent consideration for 4D was $16.2 million, which is entirely short term, is included in accrued liabilities in the consolidated balance sheet. The Company's estimated fair values of 4D assets acquired and liabilities assumed at the date of acquisition are determined based on certain valuations and analyses that have yet to be finalized, and accordingly, the assets acquired and liabilities assumed are subject to adjustment once the analyses are completed. The Company will make appropriate adjustments to the purchase price allocation prior to the completion of the measurement period as required. As of June 30, 2015, the Company incurred cumulative acquisition related costs of $0.7 million in connection with the 4D acquisition. For the six months ended June 30, 2015, the Company incurred $0.2 million of acquisition related costs, which are included within direct service costs and other operating expenses in the accompanying statements of income. Pro Forma disclosures related to the 4D acquisition have been excluded as immaterial. Acquisition of AlphaCare Holdings, Inc. Pursuant to the August 13, 2013 stock purchase agreement (the "AlphaCare Agreement"), on December 31, 2013 the Company acquired a 65% equity interest in AlphaCare Holdings, the holding company for AlphaCare, a Health Maintenance Organization ("HMO") in New York that operates a New York Managed Long- Term Care Plan in Bronx, New York, Queens, Kings and Westchester Counties, and Medicare Plans in Bronx, New York, Queens and Kings Counties. During the six months ended June 30, 2015, the Company purchased an additional $23.6 million in shares of Series B Participating Preferred Stock and Series C Participating Preferred Stock. As of June 30, 2015, the Company held an 82% voting interest and the remaining shareholders held an 18% voting interest in AlphaCare Holdings. Based on the Company's 82% equity interest in AlphaCare Holdings, the Company has included the results of operations in its consolidated financial statements. The Company reports the results of operations of AlphaCare Holdings within the Public Sector segment. Acquisition of CDMI, LLC Pursuant to the March 31, 2014 purchase agreement (the "CDMI Agreement") with CDMI, on April 30, 2014 the Company acquired all of the outstanding equity interests of CDMI. CDMI provides a range of clinical consulting programs and negotiates and administers drug rebates for managed care organizations and other customers. As consideration for the transaction, the Company paid a base price of $201.0 million, including net receipts of $4.0 million for working capital adjustments. In addition to the base purchase price, the CDMI Agreement provides for potential contingent payments up to a maximum aggregate amount of $165.0 million. The potential future payments are contingent upon CDMI meeting certain client retention, client conversion, and gross profit milestones through December 31, 2016. Other Acquisitions Pursuant to the January 15, 2015 purchase agreement (the "HSM Agreement") with HSM Physical Health, Inc. ("HSM") and HSM Companies Inc., on January 31, 2015 the Company acquired all of the outstanding equity interests of HSM. HSM provides cost containment and utilization management services focused on physical and musculoskeletal health specialties. As consideration for the transaction, the Company paid a base price of $13.5 million in cash, subject to working capital adjustments. The Company reports the results of operations of HSM within its Specialty Solutions segment. The Company's estimated fair values of HSM's assets acquired and liabilities assumed at the date of acquisition are determined based on certain valuations and analyses that have yet to be finalized, and accordingly, the assets acquired and liabilities assumed are subject to adjustment once the analyses are completed. The Company will make appropriate adjustments to the purchase price allocations prior to the completion of the measurement period as required. |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Summary of Significant Accounting Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers (Topic 606)" ("ASU 2014-09"), which is a new comprehensive revenue recognition standard that will supersede virtually all existing revenue guidance under GAAP. In July 2015, the FASB approved to defer the effective date of ASU 2014-09. This ASU is now effective for calendar years beginning after December 15, 2017. 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 June 2014, the FASB issued ASU No. 2014-12, "Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period" ("ASU 2014-12"), which revises the accounting treatment for stock compensation tied to performance targets. This ASU is effective for calendar years beginning after December 15, 2015. The guidance is not expected to materially impact the Company's consolidated results of operations, financial position, or cash flows. In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements—Going Concern (Subtopic 205-40)" ("ASU 2014- 15"), which provides guidance in GAAP about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. This amendment should reduce diversity in the timing and content of footnote disclosures. This ASU is effective for the annual period beginning after December 15, 2016 and for annual and interim periods thereafter. The guidance is not expected to materially impact the Company's consolidated results of operations, financial position, or cash flows. In February 2015, the FASB issued ASU No. 2015-02, "Amendments to the Consolidation Analysis" ("ASU 2015-02"), which amends certain requirements for determining whether a variable interest entity must be consolidated. The amendments are effective for annual and interim reporting periods of public entities beginning after December 31, 2015. The guidance is not expected to materially impact the Company's consolidated results of operations, financial position, or cash flows. In April 2015, the FASB issued ASU No. 2015-03, "Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"). The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This guidance is effective for annual and interim reporting periods of public entities beginning after December 15, 2015. The guidance is not expected to materially impact the Company's consolidated results of operations, financial position, or cash flows. In April 2015, the FASB issued ASU No. 2015-05, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement" ("ASU 2015-05"), which provides guidance to clarify the customer's accounting for fees paid in a cloud computing arrangement. This guidance is effective for annual periods and interim reporting periods of public entities beginning after December 15, 2015. The guidance is not expected to materially impact the Company's consolidated results of operations, financial position, or 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 include, among other things, accounts receivable realization, valuation allowances for deferred tax assets, valuation of goodwill and intangible assets, medical claims payable, other medical liabilities, contingent consideration, stock compensation assumptions, tax contingencies and legal liabilities. Actual results could differ from those estimates. |
Revenue Recognition | Managed Care and Other Revenue Managed Care Revenue. Managed care revenue, inclusive of revenue from the Company's risk, EAP and ASO contracts, is recognized over the applicable coverage period on a per member basis for covered members. The Company is paid a per member fee for all enrolled members, and this fee is recorded as revenue in the month in which members are entitled to service. The Company adjusts its revenue for retroactive membership terminations, additions and other changes, when such adjustments are identified, with the exception of retroactivity that can be reasonably estimated. The impact of retroactive rate amendments is generally recorded in the accounting period that terms to the amendment are finalized, and that the amendment is executed. Any fees paid prior to the month of service are recorded as deferred revenue. Managed care revenues approximated $595.1 million and $1,323.9 million for the three and six months ended June 30, 2014, respectively, and $668.6 million and $1,314.9 million for the three and six months ended June 30, 2015, respectively. Fee-For-Service and Cost-Plus Contracts. The Company has certain fee-for-service contracts, including cost-plus contracts, with customers under which the Company recognizes revenue as services are performed and as costs are incurred. This includes revenues received in relation to Patient Protection and Affordable Care Act ("ACA") fees billed on a cost reimbursement basis. Revenues from these contracts approximated $73.0 million and $132.7 million for the three and six months ended June 30, 2014, respectively, and $84.6 million and $163.6 million for the three and six months ended June 30, 2015, respectively. Block Grant Revenues. The Maricopa Contract (as defined below) was partially funded by federal, state and county block grant money, which represented annual appropriations. The Company recognized revenue from block grant activity ratably over the period to which the block grant funding applied. Block grant revenues were approximately $0.0 million and $33.0 million for the three and six months ended June 30, 2014, respectively. The Maricopa Contract terminated on March 31, 2014. Performance-Based Revenue. The Company has the ability to earn performance-based revenue under certain risk and non-risk contracts. Performance-based revenue generally is based on either the ability of the Company to manage care for its clients below specified targets, or on other operating metrics. For each such contract, the Company estimates and records performance-based revenue after considering the relevant contractual terms and the data available for the performance-based revenue calculation. Pro-rata performance-based revenue may be recognized on an interim basis pursuant to the rights and obligations of each party upon termination of the contracts. Performance-based revenues approximated $2.4 million and $5.4 million, respectively, for the three and six months ended June 30, 2014, respectively, and $1.1 million and $5.7 million for the three and six months ended June 30, 2015, respectively. Rebate Revenue. The Company administers a rebate program 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. Each period, the Company estimates the total rebates earned based on actual volumes of pharmaceutical purchases by the Company's clients, as well as historical and/or anticipated sharing percentages. The Company earns fees based upon the volume of rebates generated for its clients. The Company does not record as rebate revenue any rebates that are passed through to its clients. Total rebate revenues approximated $9.2 million and $13.3 million for the three and six months ended June 30, 2014, respectively, and $16.9 million and $32.8 million for the three and six months ended June 30, 2015, respectively. 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. PBM and Dispensing Revenue Pharmacy Benefit Management Revenue. The Company recognizes PBM revenue, which consists of a negotiated prescription price (ingredient cost plus dispensing fee), co-payments collected by the pharmacy and any associated administrative fees, when claims are adjudicated. 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 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. PBM revenues approximated $146.3 million and $227.5 million for the three and six months ended June 30, 2014 and $330.0 million and $515.8 million for the three and six months ended June 30, 2015, respectively. Dispensing Revenue. The Company recognizes dispensing revenue, which includes the co-payments received from members of the health plans the Company serves, when the specialty pharmaceutical drugs are shipped. 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. Revenues from the dispensing of specialty pharmaceutical drugs on behalf of health plans were $59.4 million and $115.1 million for the three and six months ended June 30, 2014 and $51.4 million and $97.9 million for the three and six months ended June 30, 2015, respectively. Significant Customers Customers exceeding ten percent of the consolidated Company's net revenues The Company provides behavioral healthcare management and other related services to members in the state of Iowa pursuant to contracts with the State of Iowa (the "Iowa Contracts"). The Company currently has two contracts; the Iowa Medicaid Contract and Iowa Medicaid Integrated Health Home Provider Agreement ("IHH Agreement"). Under the Iowa Medicaid Contract, the Company is responsible for providing managed mental health and substance abuse treatment to enrollees under a Medicaid 1915(b) waiver, as well as substance abuse treatment services plan funded by federal block grant and state appropriations under the authority of the Iowa Department of Public Health. The Iowa Health and Wellness Plan for members who qualify as an "exempt individual", as defined in 441 of the Iowa Administrative Code, were also added to the contract on January 1, 2014. The latest Iowa Medicaid Contract began on January 1, 2010 and extended through June 30, 2015. The Iowa Department of Human Services and the Iowa Department of Public Health has the right to terminate the Iowa Medicaid Contract upon 30 days notice for any reason or no reason at all. In June 2015, the Company received a notice of intent to extend the Iowa Medicaid Contract through December 31, 2015, to coincide with the start date of the new Iowa High Quality Healthcare Initiative, as discussed below. Under the IHH Agreement, the Company establishes a health home for individuals identified with serious and persistent mental illness through enrolled provider organizations capable of providing enhanced care. The IHH Agreement began on July 1, 2013 and extends through June 30, 2016 unless sooner terminated by either party with 60 days notice for any reason or no reason at all. The IHH program is part of the new Iowa High Quality Healthcare Initiative and we expect that the end of the IHH agreement will coincide with the start date of the new initiative. The Iowa Contracts generated net revenues of $213.0 million and $261.9 million for the six months ended June 30, 2014 and 2015, respectively. On February 16, 2015 the Iowa Department of Human Services (the "Agency") released the Iowa High Quality Healthcare Initiative Request for Proposal ("RFP"). The Agency intends to contract on a statewide basis with two to four successful bidders with a demonstrated capacity to coordinate care and provide quality outcomes for the Medicaid and Children's Health Insurance Program ("CHIP") populations. The program will enroll the majority of the Iowa Medicaid and CHIP populations and will also provide services for individuals qualifying for Iowa Department of Public Health ("IDPH") funded substance abuse services. The anticipated start of the contract is January 1, 2016 for an initial period of three years and the ability for the Agency to extend the contract for two additional two year terms. The RFP includes the services provided by the Company's current Iowa Contracts. The Company has submitted a bid on this RFP. There can be no assurance that the Company will be awarded a contract pursuant to the RFP, or that the terms of any contract awarded pursuant to the RFP will be similar to the current Iowa Contracts. The Company provides behavioral healthcare management and other related services to members in the state of Florida pursuant to contracts with the State of Florida (the "Florida Contracts"). The Company had behavioral healthcare contracts with various areas in the State of Florida (the "Florida Areas") which were part of the Florida Medicaid program. The State of Florida implemented a new system of mandated managed care through which Medicaid enrollees receive integrated healthcare services, and in 2014 phased out the behavioral healthcare programs under which the Florida Areas' contracts operated. The Company has a contract with the State of Florida to provide integrated healthcare services under the new program ("the Florida Medicaid Contract"). The Florida Medicaid Contract began on February 4, 2014 and extends through December 31, 2018, unless sooner terminated by the parties. The State of Florida has the right to terminate the Florida Medicaid Contract with cause, as defined, upon 24 hour notice and upon 30 days notice for any reason or no reason at all. The Florida Contracts generated net revenues of $57.4 million and $218.0 million for the six months ended June, 2014 and 2015, respectively. Through March 31, 2014, the Company provided behavioral healthcare management and other related services to approximately 680,000 members in Maricopa County, Arizona as the Regional Behavioral Health Authority ("RBHA") for GSA6 ("Maricopa County") pursuant to a contract with the State of Arizona (the "Maricopa Contract"). The Maricopa Contract was for the management of the publicly funded behavioral health system that delivered mental health, substance abuse and crisis services for adults, youth, and children. The Maricopa Contract terminated on March 31, 2014. The Maricopa Contract generated net revenues of $209.5 million for the six months ended June 30, 2014. Customers exceeding ten percent of segment net revenues In addition to the Iowa Contracts, the Florida Contracts, and the Maricopa 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, 2014 and 2015 (in thousands): Segment Term Date 2014 2015 Commercial Customer A June 30, 2014(1) $ $ — Customer B December 31, 2019 Customer C August 14, 2017 Public Sector None Specialty Solutions Customer A November 30, 2016 Customer D December 31, 2017(2) Customer E June 30, 2016(3) * Customer F June 30, 2017 Customer G January 31, 2016 Customer H April 1, 2017 to October 1, 2017 * Pharmacy Management Customer I November 30, 2015 to April 4, 2016(4) * Customer J December 16, 2016 * Revenue amount did not exceed ten percent of net revenues for the respective segment for the period presented. Amount is shown for comparative purposes only. (1) The contract has terminated. (2) On December 31, 2014, this contract was amended and extended through December 31, 2017. Historically the Company provided services on a risk basis. Under the amended contract, the funding arrangement is a combination of risk and ASO based services. (3) The contract transitioned from risk to ASO based services effective July 1, 2014. (4) The customer has more than one contract. The individual contracts are scheduled to terminate at various points during the time period indicated above. 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. Net revenues from the Pennsylvania Counties in the aggregate totaled $179.0 million and $186.1 million for the six months ended June 30, 2014 and 2015, respectively. The Company's contracts with customers typically have 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 60 and 180 days) or upon the occurrence of other specified events. In addition, the Company's contracts with federal, state and local governmental agencies generally are conditioned on legislative appropriations. These contracts generally can be terminated or modified by the customer if such appropriations are not made. |
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, 2014 and June 30, 2015 (in thousands): December 31, 2014 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents(1) $ — $ $ — $ Restricted cash(2) — — Investments: U.S. government and agency securities — — Obligations of government-sponsored enterprises(3) — — Corporate debt securities — — Certificates of deposit — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets held at fair value $ $ $ — $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities Contingent consideration $ — $ — $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities held at fair value $ — $ — $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2015 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents(4) $ — $ $ — $ Restricted cash(5) — — Investments: U.S. government and agency securities — — Obligations of government-sponsored enterprises(3) — — Corporate debt securities — — Certificates of deposit — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets held at fair value $ $ $ — $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities Contingent consideration $ — $ — $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities held at fair value $ — $ — $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Excludes $116.0 million of cash held in bank accounts by the Company. (2) Excludes $149.3 million of restricted cash held in bank accounts by the Company. (3) Includes investments in notes issued by the Federal Home Loan Bank. (4) Excludes $95.3 million of cash held in bank accounts by the Company. (5) Excludes $88.8 million of restricted cash held in bank accounts by the Company. For the six months ended June 30, 2015, the Company has not transferred any assets between fair value measurement levels. The carrying values of financial instruments, including accounts receivable and accounts payable, approximate their fair values due to their short-term maturities. The estimated fair value of the Company's term loan of $240.6 million as of June 30, 2015 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. The contingent consideration liability reflects the fair value of potential future payments related to the CDMI, LLC ("CDMI"), Cobalt Therapeutics, LLC ("Cobalt"), and 4D Pharmacy Management Systems, Inc. ("4D") acquisitions. The CDMI purchase agreement provides for potential contingent payments up to a maximum aggregate amount of $165.0 million. The potential future payments are contingent upon CDMI meeting certain client retention, client conversion, and gross profit milestones through December 31, 2016. The Cobalt purchase agreement provides for potential contingent payments up to a maximum aggregate amount of $6.0 million. The potential future payments are contingent upon engagement of new members and new contract execution through June 30, 2017. The 4D purchase agreement provides for potential contingent payments up to a maximum aggregate amount of $30.0 million. The potential future payments are contingent upon the achievement of certain growth targets in the underlying dual eligible membership served by 4D during calendar year 2015 and retention of certain business through 2018. As of the balance sheet date, the fair value of contingent consideration is determined based on probabilities of payment, projected payment dates, discount rates, and projected revenues, gross profits, client base, member engagement, and new contract execution. The projected revenues, gross profits, client base, member engagement, and new contract execution are derived from the Company's latest internal operational forecasts. The Company used a probability weighted discounted cash flow method to arrive at the fair value of the contingent consideration. Changes in the operational forecasts, probabilities of payment, discount rates, or projected payment dates may result in a change in the fair value measurement. Any changes in the fair value measurement are reflected as income or expense in the consolidated statements of income. 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. For CDMI, the following unobservable inputs were used in the fair value measurement of contingent consideration: (i) discount rate of 14.5 percent; (ii) probabilities of payment for the individual components of the contingent consideration arrangement of approximately zero to 100 percent; and (iii) projected payment dates of 2015 to 2017. For CDMI, the Company estimated undiscounted future contingent payments of $65.7 million and $79.1 million as of December 31, 2014 and June 30, 2015, respectively. As of June 30, 2015, the fair value of the short term and long term contingent consideration for CDMI was $9.9 million and $60.5 million, respectively. The increase is mainly a result of improvements in operational forecasts and probabilities of payment. For Cobalt, the following unobservable inputs were used in the fair value measurement of contingent consideration: (i) discount rate of 14.5 percent; (ii) probabilities of payment for the individual components of the contingent consideration arrangement of approximately zero to 70 percent; and (iii) projected payment dates of 2015 to 2017. For Cobalt, the Company estimated undiscounted future contingent payments of $4.2 million as of December 31, 2014 and June 30, 2015. As of June 30, 2015, the fair value of the short term and long term contingent consideration for Cobalt was $0.3 million and $3.1 million, respectively. For 4D, the following unobservable inputs were used in the fair value measurement of contingent consideration: (i) discount rate of approximately 11.0 percent; (ii) probabilities of payment for the individual components of the contingent consideration arrangement of approximately zero to 100 percent; and (iii) projected payment dates of 2015 to 2016. For 4D, the Company estimated undiscounted future contingent payments of $20.6 million and $17.0 million as of the acquisition date and June 30, 2015, respectively. The net decrease was due to a payment of $5.0 million, partially offset by a net increase of $1.4 million, mainly due to changes in probabilities of payment. As of June 30, 2015, the fair value of the short term contingent consideration for 4D was $16.2 million. As of June 30, 2015, the fair value of the short term and long term contingent consideration was $26.4 million and $63.6 million, respectively, and is included in accrued liabilities and contingent consideration, respectively, in the consolidated balance sheets. The change in the fair value of the contingent consideration was $2.5 million and $17.5 million for the three and six months ended June 30, 2015, respectively, which was recorded as direct service costs and other operating expenses in the consolidated statements of income. The increase was mainly a result of changes in the present value and estimated undiscounted liability, as noted above. The following table summarizes the Company's liability for contingent consideration (in thousands): June 30, 2015 Balance as of beginning of period $ Acquistion of 4D Change in fair value Payments ) ​ ​ ​ ​ ​ Balance as of end of period $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
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 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 income in the consolidated statements of income and the non-credit component of the other-than-temporary impairment is recognized in other comprehensive income. As of December 31, 2014 and June 30, 2015, there were no 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, 2014 or 2015. The following is a summary of short-term and long-term investments at December 31, 2014 and June 30, 2015 (in thousands): December 31, 2014 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value U.S. government and agency securities $ $ — $ ) $ Obligations of government-sponsored enterprises(1) ) Corporate debt securities ) Certificates of deposit — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total investments at December 31, 2014 $ $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2015 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value U.S. government and agency securities $ $ $ ) $ Obligations of government-sponsored enterprises(1) — Corporate debt securities ) Certificates of deposit — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total investments at June 30, 2015 $ $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Includes investments in notes issued by the Federal Home Loan Bank. The maturity dates of the Company's investments as of June 30, 2015 are summarized below (in thousands): Amortized Cost Estimated Fair Value 2015 $ $ 2016 2017 ​ ​ ​ ​ ​ ​ ​ ​ Total investments at June 30, 2015 $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Income Taxes | Income Taxes The Company's effective income tax rates were 52.6 percent and 46.8 percent for the six months ended June 30, 2014 and 2015, 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 and valuation allowances. The Company also accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes. The effective income tax rate for the six months ended June 30, 2015 is lower than the effective rate for the six months ended June 30, 2014 mainly due to more significant valuation allowances added in the prior year than the current year on certain deferred assets, and the reversal of tax contingencies in the current year from the favorable settlement of state income tax examinations. The Company files a consolidated federal income tax return for the Company and most of its eighty-percent or more controlled subsidiaries. The Company files a separate consolidated federal income tax return for AlphaCare of New York, Inc. ("AlphaCare") and its parent, AlphaCare Holdings, Inc. ("AlphaCare Holdings"). The Company and its subsidiaries also file income tax returns in various state and local jurisdictions. With few exceptions, the Company is no longer subject to state or local income tax assessments by tax authorities for years ended prior to 2011. Net Operating Loss Carryforwards The Company has $3.0 million of federal net operating loss carryforwards ("NOLs") available to reduce its federal consolidated taxable income in 2015 and subsequent years. These NOLs will expire in 2018 through 2019 if not used and are subject to examination and adjustment by the Internal Revenue Service ("IRS"). AlphaCare has $24.5 million of federal NOLs available to reduce its consolidated taxable income in 2015 and subsequent years. These NOLs will expire in 2033 through 2034 if not used and are subject to examination and adjustment by the IRS. The Company and its subsidiaries also have $160.5 million of state NOLs available to reduce state taxable income at certain subsidiaries in 2015 and subsequent years. Most of these NOLs will expire in 2017 through 2034 if not used and are subject to examination and adjustment by the respective state tax authorities. Deferred tax assets as of December 31, 2014 and June 30, 2015 are shown net of valuation allowances of $12.4 million and $12.5 million, respectively. These valuation allowances mostly relate to uncertainties regarding the eventual realization of the AlphaCare NOLs and certain state NOLs. 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. Future changes in the estimated realizable portion of deferred tax assets could materially affect the Company's financial condition and results of operations. |
Health Care Reform | Health Care Reform The Patient Protection and the Affordable Care Act ("ACA"), 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 a state public sector 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. For 2014, the ACA fee was $21.4 million which has been paid. For 2015, the ACA fee is estimated to be $26.4 million and is included in accrued liabilities in the consolidated balance sheets. Of these amounts, $5.6 million and $10.7 million was expensed in the three and six months ended June 30, 2014, respectively, and $6.3 million and $13.2 million was expensed in the three and six months ended June 30, 2015, respectively, which was included in direct service costs and other operating expenses in the consolidated statements of income. The Company has recorded revenues of $10.9 million and $14.1 million in the three and six months ended June 30, 2014, respectively, and $10.7 million and $22.4 million in the three and six months ended June 30,2015, respectively, associated with the accrual for the reimbursement of the economic impact of the ACA fees from its customers. |
Stock Compensation | Stock Compensation At December 31, 2014 and June 30, 2015, 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, 2014, with the exception of the Performance-Based Restricted Stock Units issued during the six months ended June 30, 2015, which are described below. The Company recorded stock compensation expense of $9.5 million and $14.0 million for the three and six months ended June 30, 2014 and $13.8 million and $27.7 million for the three and six months ended June 30, 2015, respectively. Stock compensation expense recognized in the consolidated statements of income for the six months ended June 30, 2014 and 2015 has been reduced for forfeitures, estimated at between zero and four percent for both periods. The weighted average grant date fair value of all stock options granted during the six months ended June 30, 2015 was $14.00 as estimated using the Black-Scholes-Merton option pricing model, which also assumed an expected volatility of 25.03 percent based on the historical volatility of the Company's stock price. The benefits of tax deductions in excess of recognized stock compensation expense are reported as a financing cash flow, rather than as an operating cash flow. In the six months ended June 30, 2014 and 2015, $2.4 million and $3.8 million, respectively, of benefits of such tax deductions related to stock compensation expense were realized and as such were reported as financing cash flows. For the six months ended June 30, 2014, the net change to additional paid in capital related to tax benefits (deficiencies) was $2.1 million, which includes $2.4 million of excess tax benefits offset by $(0.3) million of excess tax deficiencies. For the six months ended June 30, 2015, the net change to additional paid in capital related to tax benefits (deficiencies) was $3.7 million, which includes $3.8 million of excess tax benefits offset by $(0.1) million of excess tax deficiencies. Summarized information related to the Company's stock options for the six months ended June 30, 2015 is as follows: Options Weighted Average Exercise Price Outstanding, beginning of period $ Granted Forfeited ) Exercised ) ​ ​ ​ ​ ​ ​ ​ ​ Outstanding, end of period $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Vested and expected to vest at end of period $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable, end of period $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ All of the Company's options granted during the six months ended June 30, 2015 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, 2015 is as follows: Shares Weighted Average Grant Date Fair Value Outstanding, beginning of period $ Awarded Vested ) Forfeited — — ​ ​ ​ ​ ​ ​ ​ ​ Outstanding, end of period $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Summarized information related to the Company's nonvested restricted stock units ("RSUs") for the six months ended June 30, 2015 is as follows: Shares Weighted Average Grant Date Fair Value Outstanding, beginning of period $ Awarded Vested ) Forfeited ) ​ ​ ​ ​ ​ ​ ​ ​ Outstanding, end of period $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The vesting period for RSAs ranges from 12 months to 42 months. In general, RSUs vest ratably on each anniversary over the three years subsequent to grant. In addition, the RSUs outstanding at the beginning of the period contain associated performance hurdle(s) that must be met in order for the awards to vest. The RSUs granted during the six months ended June 30, 2015 do not contain associated performance hurdles. During the six months ended June 30, 2015, the Company granted 43,900 performance-based restricted stock units ("PSUs") to members of management. During the six months ended June 30, 2015, 2,472 of the PSUs awarded were forfeited. The PSUs are subject to market-based conditions. The estimated fair value of the PSUs granted was $85.00, 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 1%, and expected volatility of 15% to 52% (average of 28%). The PSUs 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, 2017 and vesting on March 4, 2018, 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 will be a percentage of shares for which the award is targeted 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 vary 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, 2018 by the average share value of the Company's Common Stock over the 30 trading days beginning on January 1, 2015, with a deemed reinvestment of any dividends declared during the performance period. The Company's Peer Group includes 54 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 Capital Lease Obligations | Long Term Debt and Capital Lease Obligations On July 23, 2014, the Company entered into a $500.0 million Credit Agreement with various lenders that provides for Magellan Rx Management, Inc. (a wholly owned subsidiary of Magellan Health, Inc.) to borrow up to $250.0 million of revolving loans, with a sublimit of up to $70.0 million for the issuance of letters of credit for the account of the Company, and a term loan in an original aggregate principal amount of $250.0 million (the "2014 Credit Facility"). The 2014 Credit Facility is guaranteed by substantially all of the non-regulated subsidiaries of the Company and will mature on July 23, 2019, but the Company holds an option to extend the 2014 Credit Facility for an additional one year period. Under the 2014 Credit Facility, the annual interest rate on revolving and term loan borrowings is equal to (i) in the case of base rate loans, the sum of a borrowing margin of 0.50 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 1.00 percent, or (ii) in the case of Eurodollar rate loans, the sum of a borrowing margin of 1.50 percent plus the Eurodollar rate for the selected interest period, which rates shall be adjusted from time to time based on the Company's total leverage ratio. The Company has the option to borrow in base rate loans or Eurodollar rate loans at its discretion. Letters of credit issued bear interest at the rate of 1.625 percent. The commitment commission on the 2014 Credit Facility is 0.20 percent of the unused Revolving Loan Commitment, which rate shall be adjusted from time to time based on the Company's total leverage ratio. On September 30, 2014, the Company completed a draw-down of the $250.0 million term loan. The borrowings will initially be maintained as a Eurodollar loan. The term loan is subject to certain quarterly amortization payments. As of June 30, 2015 the remaining balance on the term loan was $240.6 million. The term loan will mature on July 23, 2019. As of June 30, 2015, the term loan bore interest at a rate of 1.50 percent plus the London Interbank Offered Rate ("LIBOR"), which was equivalent to a total interest rate of 1.6866 percent. For the six months ended June 30, 2015, the weighted average interest rate was 1.676 percent. As of June 30, 2015, the contractual maturities of the term loan were as follows: 2015—$6.2 million; 2016—$15.6 million; 2017—$25.0 million; 2018—$25.0 million; and 2019—$168.8 million. There were $24.6 million of capital lease obligations at December 31, 2014 and June 30, 2015. The Company had $32.9 million and $33.4 million of letters of credit outstanding at December 31, 2014 and June 30, 2015, respectively, and no revolving loan borrowings at December 31, 2014 or June 30, 2015. |
Redeemable Non-controlling Interest | Redeemable Non-Controlling Interest As of June 30, 2015 the Company held an 82% equity interest in AlphaCare Holdings. The other shareholders of AlphaCare Holdings have the right to exercise put options, requiring the Company to purchase up to 50% of the remaining shares prior to January 1, 2017 provided certain membership levels are attained. After December 31, 2016 the other shareholders of AlphaCare Holdings have the right to exercise put options requiring the Company to purchase all or any portion of the remaining shares. In addition, after December 31, 2016 the Company has the right to purchase all remaining shares. Non-controlling interests with redemption features, such as put options, that are not solely within the Company's control are considered redeemable non-controlling interests. Redeemable non-controlling interest is considered to be temporary and is therefore reported in a mezzanine level between liabilities and stockholders' equity on the Company's consolidated balance sheet at the greater of the initial carrying amount adjusted for the non-controlling interest's share of net income or loss or its redemption value. The carrying value of the non-controlling interest as of December 31, 2014 and June 30, 2015 was $5.9 million and $8.2 million, respectively. The $2.3 million increase in carrying value is a result of the impact of additional capital provided by the Company, partially offset by operating losses. The Company recognizes changes in the redemption value on a quarterly basis and adjusts the carrying amount of the non-controlling interest to equal the redemption value at the end of each reporting period. Under this method, this is viewed at the end of the reporting period as if it were also the redemption date for the non-controlling interest. The Company will reflect redemption value adjustments in the earnings per share calculation if redemption value is in excess of the carrying value of the non-controlling interest. As of June 30, 2015, the carrying value of the non-controlling interest exceeded the redemption value and therefore no adjustment to the carrying value was required. |
General (Tables)
General (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
General | |
Schedule of customers generating in excess of ten percent of net revenues for respective segment | In addition to the Iowa Contracts, the Florida Contracts, and the Maricopa 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, 2014 and 2015 (in thousands): Segment Term Date 2014 2015 Commercial Customer A June 30, 2014(1) $ $ — Customer B December 31, 2019 Customer C August 14, 2017 Public Sector None Specialty Solutions Customer A November 30, 2016 Customer D December 31, 2017(2) Customer E June 30, 2016(3) * Customer F June 30, 2017 Customer G January 31, 2016 Customer H April 1, 2017 to October 1, 2017 * Pharmacy Management Customer I November 30, 2015 to April 4, 2016(4) * Customer J December 16, 2016 * Revenue amount did not exceed ten percent of net revenues for the respective segment for the period presented. Amount is shown for comparative purposes only. (1) The contract has terminated. (2) On December 31, 2014, this contract was amended and extended through December 31, 2017. Historically the Company provided services on a risk basis. Under the amended contract, the funding arrangement is a combination of risk and ASO based services. (3) The contract transitioned from risk to ASO based services effective July 1, 2014. (4) The customer has more than one contract. The individual contracts are scheduled to terminate at various points during the time period indicated above. |
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, 2014 and June 30, 2015 (in thousands): December 31, 2014 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents(1) $ — $ $ — $ Restricted cash(2) — — Investments: U.S. government and agency securities — — Obligations of government-sponsored enterprises(3) — — Corporate debt securities — — Certificates of deposit — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets held at fair value $ $ $ — $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities Contingent consideration $ — $ — $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities held at fair value $ — $ — $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2015 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents(4) $ — $ $ — $ Restricted cash(5) — — Investments: U.S. government and agency securities — — Obligations of government-sponsored enterprises(3) — — Corporate debt securities — — Certificates of deposit — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets held at fair value $ $ $ — $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities Contingent consideration $ — $ — $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities held at fair value $ — $ — $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Excludes $116.0 million of cash held in bank accounts by the Company. (2) Excludes $149.3 million of restricted cash held in bank accounts by the Company. (3) Includes investments in notes issued by the Federal Home Loan Bank. (4) Excludes $95.3 million of cash held in bank accounts by the Company. (5) Excludes $88.8 million of restricted cash held in bank accounts by the Company. |
Summary of the Company's liability for contingent consideration | The following table summarizes the Company's liability for contingent consideration (in thousands): June 30, 2015 Balance as of beginning of period $ Acquistion of 4D Change in fair value Payments ) ​ ​ ​ ​ ​ Balance as of end of period $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Summary of short-term and long-term "available-for-sale" investments | The following is a summary of short-term and long-term investments at December 31, 2014 and June 30, 2015 (in thousands): December 31, 2014 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value U.S. government and agency securities $ $ — $ ) $ Obligations of government-sponsored enterprises(1) ) Corporate debt securities ) Certificates of deposit — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total investments at December 31, 2014 $ $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2015 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value U.S. government and agency securities $ $ $ ) $ Obligations of government-sponsored enterprises(1) — Corporate debt securities ) Certificates of deposit — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total investments at June 30, 2015 $ $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Includes investments 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, 2015 are summarized below (in thousands): Amortized Cost Estimated Fair Value 2015 $ $ 2016 2017 ​ ​ ​ ​ ​ ​ ​ ​ Total investments at June 30, 2015 $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of stock option activity | Summarized information related to the Company's stock options for the six months ended June 30, 2015 is as follows: Options Weighted Average Exercise Price Outstanding, beginning of period $ Granted Forfeited ) Exercised ) ​ ​ ​ ​ ​ ​ ​ ​ Outstanding, end of period $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Vested and expected to vest at end of period $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable, end of period $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of Non vested restricted stock award activity | Summarized information related to the Company's nonvested restricted stock awards ("RSAs") for the six months ended June 30, 2015 is as follows: Shares Weighted Average Grant Date Fair Value Outstanding, beginning of period $ Awarded Vested ) Forfeited — — ​ ​ ​ ​ ​ ​ ​ ​ Outstanding, end of period $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of Non vested restricted stock units | Summarized information related to the Company's nonvested restricted stock units ("RSUs") for the six months ended June 30, 2015 is as follows: Shares Weighted Average Grant Date Fair Value Outstanding, beginning of period $ Awarded Vested ) Forfeited ) ​ ​ ​ ​ ​ ​ ​ ​ Outstanding, end of period $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Net Income per Common Share A16
Net Income per Common Share Attributable to Magellan Health, Inc. (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Net Income per Common Share Attributable to Magellan Health, Inc. | |
Computation of basic and diluted earnings per share | The following tables reconcile 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): Three Months Ended June 30, Six Months Ended June 30, 2014 2015 2014 2015 Numerator: Net income attributable to Magellan Health, Inc. $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator: Weighted average number of common shares outstanding—basic Common stock equivalents—stock options Common stock equivalents—RSAs Common stock equivalents—RSUs — Common stock equivalents—PSUs — — Common stock equivalents—employee stock purchase plan ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average number of common shares outstanding—diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income attributable to Magellan Health, Inc. per common share—basic $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income attributable to Magellan Health, Inc. per common share—diluted $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Business Segment Information (T
Business Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Business Segment Information | |
Schedule of operating results by business segment | The following tables summarize, for the periods indicated, operating results by business segment (in thousands): Commercial Public Sector Specialty Solutions Pharmacy Management Corporate and Elimination Consolidated Three Months Ended June 30, 2014 Managed care and other revenue $ $ $ $ $ — $ PBM and dispensing revenue — — — ) Cost of care ) ) ) — ) Cost of goods sold — — — ) ) Direct service costs and other ) ) ) ) ) ) Stock compensation expense(1) Less: non-controlling interest segment profit (loss)(2) — ) — — — ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment profit (loss) $ $ $ $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Public Sector Specialty Solutions Pharmacy Management Corporate and Elimination Consolidated Three Months Ended June 30, 2015 Managed care and other revenue $ $ $ $ $ ) $ PBM and dispensing revenue — — — ) Cost of care ) ) ) — — ) Cost of goods sold — — — ) ) Direct service costs and other ) ) ) ) ) ) Stock compensation expense(1) Changes in fair value of contingent consideration(1) — — — Less: non-controlling interest segment profit (loss)(2) — ) — — ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment profit (loss) $ $ $ $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Public Sector Specialty Solutions Pharmacy Management Corporate and Elimination Consolidated Six Months Ended June 30, 2014 Managed care and other revenue $ $ $ $ $ ) $ PBM and dispensing revenue — — — ) Cost of care ) ) ) ) ) Cost of goods sold — — — ) ) Direct service costs and other ) ) ) ) ) ) Stock compensation expense(1) Less: non-controlling interest segment profit (loss)(2) — ) — — — ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment profit (loss) $ $ $ $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Public Sector Specialty Solutions Pharmacy Management Corporate and Elimination Consolidated Six Months Ended June 30, 2015 Managed care and other revenue $ $ $ $ $ ) $ PBM and dispensing revenue — — — ) Cost of care ) ) ) — ) Cost of goods sold — — — ) ) Direct service costs and other ) ) ) ) ) ) Stock compensation expense(1) Changes in fair value of contingent consideration(1) — — — Less: non-controlling interest segment profit (loss)(2) — ) — — ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment profit (loss) $ $ $ $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Stock compensation expense, as well as changes in the fair value of contingent consideration recorded in relation to the acquisitions, are included in direct service costs and other operating expenses; however, these amounts are excluded from the computation of Segment Profit. (2) The non-controlling portion of AlphaCare's segment profit (loss) is excluded from the computation of Segment Profit. |
Schedule of reconciliation of Segment Profit to consolidated income before income taxes | The following table reconciles Segment Profit to income before income taxes (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2014 2015 2014 2015 Segment profit $ $ $ $ Stock compensation expense ) ) ) ) Changes in fair value of contingent consideration — ) — ) Non-controlling interest segment profit (loss) ) ) ) ) Depreciation and amortization ) ) ) ) Interest expense ) ) ) ) Interest income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income taxes $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies | |
Schedule of stock repurchases made under open market | Pursuant to this program, the Company made open market purchases as follows (aggregate cost excludes broker commissions and is reflected in millions): Period Total Number of Shares Purchased Average Price Paid per Share Aggregate Cost November 24, 2014 - December 31, 2014 $ $ January 1, 2015 - June 30, 2015 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Acquisitions | |
Summary of estimated fair values of assets acquired and liabilities assumed at the date of the acquisition | The estimated fair values of 4D assets acquired and liabilities assumed at the date of acquisition are summarized as follows (in thousands): Assets acquired: Current assets (includes $14,178 of cash and $21,400 of accounts receivable) $ Property and equipment, net Other identified intangible assets Goodwill ​ ​ ​ ​ ​ Total assets acquired ​ ​ ​ ​ ​ Liabilities assumed: Current liabilities Contingent consideration ​ ​ ​ ​ ​ Total liabilities assumed ​ ​ ​ ​ ​ Net assets acquired $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
General (Details)
General (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015USD ($)item | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)segmentmultiplieritem | Jun. 30, 2014USD ($) | |
Operating results by business segment | ||||
Number of segments | segment | 5 | |||
Revenues | $ 1,157,607,000 | $ 888,014,000 | $ 2,138,575,000 | $ 1,854,489,000 |
Commercial | Risk Based Product | ||||
Operating results by business segment | ||||
Covered Lives | item | 2,600,000 | 2,600,000 | ||
Revenues | $ 138,800,000 | |||
Commercial | ASO (Administrative Services Only) | ||||
Operating results by business segment | ||||
Covered Lives | item | 12,700,000 | 12,700,000 | ||
Revenues | $ 62,100,000 | |||
Commercial | EAP (Employee Assistance Programs) | ||||
Operating results by business segment | ||||
Covered Lives | item | 13,400,000 | 13,400,000 | ||
Revenues | $ 102,300,000 | |||
Public Sector | Risk Based Product | ||||
Operating results by business segment | ||||
Covered Lives | item | 1,500,000 | 1,500,000 | ||
Revenues | $ 832,500,000 | |||
Public Sector | ASO (Administrative Services Only) | ||||
Operating results by business segment | ||||
Covered Lives | item | 1,800,000 | 1,800,000 | ||
Revenues | $ 30,300,000 | |||
Specialty Solutions | Risk Based Product | ||||
Operating results by business segment | ||||
Covered Lives | item | 7,400,000 | 7,400,000 | ||
Revenues | $ 228,400,000 | |||
Specialty Solutions | ASO (Administrative Services Only) | ||||
Operating results by business segment | ||||
Covered Lives | item | 16,200,000 | 16,200,000 | ||
Revenues | $ 28,200,000 | |||
Pharmacy Management | ||||
Operating results by business segment | ||||
Number of multiple applied for adjusted claim | multiplier | 3 | |||
Number of days for applying the multiple | 90 days | |||
Pharmacy Management | PBM (Pharmacy Benefit Management) | ||||
Operating results by business segment | ||||
Adjusted claims paid | $ 8,100,000 | |||
Pharmacy Management | PBA (Pharmacy Benefit Administration) | ||||
Operating results by business segment | ||||
Adjusted claims paid | $ 29,500,000 | |||
Number of states served | item | 25 | 25 | ||
Pharmacy Management | Specialty Dispensing | ||||
Operating results by business segment | ||||
Adjusted claims paid | $ 52,400 | |||
Pharmacy Management | Commercial PBM | ||||
Operating results by business segment | ||||
Generic dispensing rate (as a percent) | 84.00% | |||
Number of members served | item | 1,600,000 | |||
Pharmacy Management | Medical pharmacy management programs | ||||
Operating results by business segment | ||||
Number of members served | item | 10,000,000 | |||
Managed Healthcare | ||||
Operating results by business segment | ||||
Number of segments | segment | 2 |
General (Details 2)
General (Details 2) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Mar. 31, 2014item | Jun. 30, 2015USD ($)item | Jun. 30, 2014USD ($) | |
Net revenues | |||||
Managed Care Revenue | $ 668,600 | $ 595,100 | $ 1,314,900 | $ 1,323,900 | |
Fee-For-Service and Cost-Plus Contracts Revenue | 84,600 | 73,000 | 163,600 | 132,700 | |
Block Grant Revenues | 0 | 33,000 | |||
Performance-Based Revenue | 1,100 | 2,400 | 5,700 | 5,400 | |
Rebate Revenues | 16,900 | 9,200 | 32,800 | 13,300 | |
PBM Revenue | 330,000 | 146,300 | 515,800 | 227,500 | |
Dispensing Revenue | 51,400 | 59,400 | 97,900 | 115,100 | |
Significant customers | |||||
Revenues generated | $ 1,157,607 | $ 888,014 | $ 2,138,575 | 1,854,489 | |
Maricopa County Regional Behavioral Health Authority | |||||
Significant customers | |||||
Number of members receiving behavioral healthcare management and other related services | item | 680,000 | ||||
Revenues generated | 209,500 | ||||
Iowa Contracts | |||||
Significant customers | |||||
Number of contracts | item | 2 | ||||
Revenues generated | $ 261,900 | 213,000 | |||
Iowa Medicaid Contract | |||||
Significant customers | |||||
Termination notice period without cause | 30 days | ||||
Iowa Medicaid Integrated Health Home Provider Agreement | |||||
Significant customers | |||||
Termination notice period without cause | 60 days | ||||
Florida Medicaid Contract | |||||
Significant customers | |||||
Termination notice | 1 day | ||||
Termination notice period without cause | 30 days | ||||
Florida Contracts | |||||
Significant customers | |||||
Revenues generated | $ 218,000 | 57,400 | |||
Commercial | Customer A | Service | |||||
Significant customers | |||||
Revenues generated | 110,492 | ||||
Commercial | Customer B | Service | |||||
Significant customers | |||||
Revenues generated | 117,098 | 90,923 | |||
Commercial | Customer C | Service | |||||
Significant customers | |||||
Revenues generated | 63,900 | 47,769 | |||
Specialty Solutions | Customer A | Service | |||||
Significant customers | |||||
Revenues generated | 30,743 | 26,577 | |||
Specialty Solutions | Customer D | Service | |||||
Significant customers | |||||
Revenues generated | 67,568 | 69,988 | |||
Specialty Solutions | Customer E | Service | |||||
Significant customers | |||||
Revenues generated | 3,420 | 26,515 | |||
Specialty Solutions | Customer F | Service | |||||
Significant customers | |||||
Revenues generated | 47,696 | 34,901 | |||
Specialty Solutions | Customer G | Service | |||||
Significant customers | |||||
Revenues generated | 30,125 | 24,593 | |||
Specialty Solutions | Customer H | Service | |||||
Significant customers | |||||
Revenues generated | 29,327 | 6,461 | |||
Pharmacy Management | Customer I | Service | |||||
Significant customers | |||||
Revenues generated | $ 60,618 | 60,972 | |||
Minimum number of contracts per customer | item | 1 | ||||
Pharmacy Management | Customer J | Service | |||||
Significant customers | |||||
Revenues generated | $ 158,132 | $ 50,325 |
General (Details 3)
General (Details 3) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Concentration of Business | ||||
Net revenue | $ 1,157,607 | $ 888,014 | $ 2,138,575 | $ 1,854,489 |
Minimum | ||||
Concentration of Business | ||||
Term of Contract | 1 year | |||
Term of renewed contract | 1 year | |||
Notice period for termination of contract | 60 days | |||
Maximum | ||||
Concentration of Business | ||||
Term of Contract | 3 years | |||
Term of renewed contract | 2 years | |||
Notice period for termination of contract | 180 days | |||
Pennsylvania Counties | ||||
Concentration of Business | ||||
Net revenue | $ 186,100 | $ 179,000 |
General (Details 4)
General (Details 4) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Assets | ||
Restricted Cash | $ 131,321 | $ 215,325 |
Investments | 342,037 | 267,654 |
Cash held in bank accounts by the Company, unrestricted | 95,300 | 116,000 |
Cash held in bank accounts by the Company, restricted | 88,800 | 149,300 |
Liabilities | ||
Contingent consideration | 89,958 | 58,153 |
Level 2 | Term Loan | ||
Liabilities | ||
Fair value of debt | 240,600 | |
Fair value measured on recurring basis | Level 1 | ||
Assets | ||
Total assets measured at fair value | 4,980 | 4,303 |
Fair value measured on recurring basis | Level 1 | U.S. Government and agency securities | ||
Assets | ||
Investments | 4,980 | 4,303 |
Fair value measured on recurring basis | Level 2 | ||
Assets | ||
Total assets measured at fair value | 452,102 | 468,623 |
Fair value measured on recurring basis | Level 2 | Other than cash held in bank accounts by Company | ||
Assets | ||
Cash and Cash Equivalents | 72,528 | 139,280 |
Restricted Cash | 42,517 | 65,992 |
Fair value measured on recurring basis | Level 2 | Obligations of government-sponsored enterprises | ||
Assets | ||
Investments | 12,007 | 15,315 |
Fair value measured on recurring basis | Level 2 | Corporate debt securities | ||
Assets | ||
Investments | 323,900 | 246,886 |
Fair value measured on recurring basis | Level 2 | Certificates of deposit | ||
Assets | ||
Investments | 1,150 | 1,150 |
Fair value measured on recurring basis | Level 3 | ||
Liabilities | ||
Contingent consideration | 89,958 | 58,153 |
Total liabilities held at fair value | 89,958 | 58,153 |
Fair value measured on recurring basis | Total | ||
Assets | ||
Total assets measured at fair value | 457,082 | 472,926 |
Liabilities | ||
Contingent consideration | 89,958 | 58,153 |
Total liabilities held at fair value | 89,958 | 58,153 |
Fair value measured on recurring basis | Total | Other than cash held in bank accounts by Company | ||
Assets | ||
Cash and Cash Equivalents | 72,528 | 139,280 |
Restricted Cash | 42,517 | 65,992 |
Fair value measured on recurring basis | Total | U.S. Government and agency securities | ||
Assets | ||
Investments | 4,980 | 4,303 |
Fair value measured on recurring basis | Total | Obligations of government-sponsored enterprises | ||
Assets | ||
Investments | 12,007 | 15,315 |
Fair value measured on recurring basis | Total | Corporate debt securities | ||
Assets | ||
Investments | 323,900 | 246,886 |
Fair value measured on recurring basis | Total | Certificates of deposit | ||
Assets | ||
Investments | $ 1,150 | $ 1,150 |
General (Details 5)
General (Details 5) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2015 | Jun. 30, 2015 | Apr. 01, 2015 | Dec. 31, 2014 | Jul. 01, 2014 | Apr. 30, 2014 | |
Fair value measurement of contingent consideration | ||||||
Fair value of the short term contingent consideration | $ 26,400 | |||||
Fair value of the long term contingent consideration | 63,542 | $ 49,839 | ||||
Fair value of the contingent consideration | 89,958 | $ 58,153 | 58,153 | |||
Liability for contingent consideration | ||||||
Balance as of beginning of period | 58,153 | |||||
Changes in fair value: Increase (Decrease) in contingent consideration | 17,536 | |||||
Payments | (5,000) | |||||
Balance as of end of period | 89,958 | 89,958 | ||||
Direct service costs and other operating expenses | ||||||
Liability for contingent consideration | ||||||
Changes in fair value: Increase (Decrease) in contingent consideration | 2,500 | $ 17,500 | ||||
CDMI | ||||||
Contingent consideration disclosures | ||||||
Maximum potential contingent payments | $ 165,000 | |||||
Fair value measurement of contingent consideration | ||||||
Fair values inputs - Discount Rate (as a percent) | 14.50% | |||||
Estimated undiscounted future contingent payments | 79,100 | 65,700 | ||||
Fair value of the short term contingent consideration | 9,900 | |||||
Fair value of the long term contingent consideration | 60,500 | |||||
CDMI | Minimum | ||||||
Fair value measurement of contingent consideration | ||||||
Fair value inputs - Probability Of Payment (as a percent) | 0.00% | |||||
CDMI | Maximum | ||||||
Fair value measurement of contingent consideration | ||||||
Fair value inputs - Probability Of Payment (as a percent) | 100.00% | |||||
Cobalt | ||||||
Contingent consideration disclosures | ||||||
Maximum potential contingent payments | $ 6,000 | |||||
Fair value measurement of contingent consideration | ||||||
Fair values inputs - Discount Rate (as a percent) | 14.50% | |||||
Estimated undiscounted future contingent payments | 4,200 | $ 4,200 | ||||
Fair value of the short term contingent consideration | 300 | |||||
Fair value of the long term contingent consideration | 3,100 | |||||
Cobalt | Minimum | ||||||
Fair value measurement of contingent consideration | ||||||
Fair value inputs - Probability Of Payment (as a percent) | 0.00% | |||||
Cobalt | Maximum | ||||||
Fair value measurement of contingent consideration | ||||||
Fair value inputs - Probability Of Payment (as a percent) | 70.00% | |||||
4D Pharmacy Management Systems, Inc. | ||||||
Contingent consideration disclosures | ||||||
Maximum potential contingent payments | $ 30,000 | |||||
Fair value measurement of contingent consideration | ||||||
Fair values inputs - Discount Rate (as a percent) | 11.00% | |||||
Estimated undiscounted future contingent payments | 17,000 | $ 20,600 | ||||
Contingent consideration offset amount | $ 1,400 | |||||
Fair value of the short term contingent consideration | $ 16,200 | |||||
Liability for contingent consideration | ||||||
Acquisition of 4D | 19,269 | |||||
Changes in fair value: Increase (Decrease) in contingent consideration | (3,600) | |||||
Payments | $ (5,000) | |||||
4D Pharmacy Management Systems, Inc. | Minimum | ||||||
Fair value measurement of contingent consideration | ||||||
Fair value inputs - Probability Of Payment (as a percent) | 0.00% | |||||
4D Pharmacy Management Systems, Inc. | Maximum | ||||||
Fair value measurement of contingent consideration | ||||||
Fair value inputs - Probability Of Payment (as a percent) | 100.00% |
General (Details 6)
General (Details 6) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Short-term and long-term investments | |||
Other-than-temporary unrealized losses | $ 0 | $ 0 | |
Realized gains or losses | 0 | $ 0 | |
Amortized Cost | 342,301 | 267,891 | |
Gross Unrealized Gains | 28 | 9 | |
Gross Unrealized Losses | (292) | (246) | |
Estimated Fair Value | 342,037 | 267,654 | |
U.S. Government and agency securities | |||
Short-term and long-term investments | |||
Amortized Cost | 4,976 | 4,305 | |
Gross Unrealized Gains | 5 | ||
Gross Unrealized Losses | (1) | (2) | |
Estimated Fair Value | 4,980 | 4,303 | |
Obligations of government-sponsored enterprises | |||
Short-term and long-term investments | |||
Amortized Cost | 12,001 | 15,318 | |
Gross Unrealized Gains | 6 | 1 | |
Gross Unrealized Losses | (4) | ||
Estimated Fair Value | 12,007 | 15,315 | |
Corporate debt securities | |||
Short-term and long-term investments | |||
Amortized Cost | 324,174 | 247,118 | |
Gross Unrealized Gains | 17 | 8 | |
Gross Unrealized Losses | (291) | (240) | |
Estimated Fair Value | 323,900 | 246,886 | |
Certificates of deposit | |||
Short-term and long-term investments | |||
Amortized Cost | 1,150 | 1,150 | |
Estimated Fair Value | $ 1,150 | $ 1,150 |
General (Details 7)
General (Details 7) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Amortized Cost | ||
Investments amortized cost maturity dates 2015 | $ 170,286 | |
Investments amortized cost maturity dates 2016 | 170,930 | |
Investments amortized cost maturity dates 2017 | 1,085 | |
Amortized Cost | 342,301 | $ 267,891 |
Estimated Fair Value | ||
Investments fair value maturity dates 2015 | 170,187 | |
Investments fair value maturity dates 2016 | 170,765 | |
Investments fair value maturity dates 2017 | 1,085 | |
Estimated Fair Value | $ 342,037 | $ 267,654 |
General (Details 8)
General (Details 8) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Income Taxes | |||
Effective income tax rates (as a percent) | 46.80% | 52.60% | |
The ownership percentage for which the entity files a consolidated federal income tax return, low end of range | 80.00% | ||
Deferred Tax Assets, Valuation Allowance | $ 12.5 | $ 12.4 | |
Federal | |||
Income Taxes | |||
Operating Loss Carryforwards | 3 | ||
State | |||
Income Taxes | |||
Operating Loss Carryforwards | 160.5 | ||
AlphaCare | Federal | |||
Income Taxes | |||
Operating Loss Carryforwards | $ 24.5 |
General (Details 9)
General (Details 9) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
General | ||||||
Projected fees Under Affordable Care Act | $ 26.4 | |||||
Fees Under Affordable Care Act Expense | $ 6.3 | $ 5.6 | $ 13.2 | $ 10.7 | $ 21.4 | |
Amount of Revenues Associated with Accrual for Reimbursement of Economic Impact of Affordable Care Act Fees from its Customers | $ 10.7 | $ 10.9 | $ 22.4 | $ 14.1 |
General (Details 10)
General (Details 10) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015USD ($)$ / sharesshares | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)company$ / sharesshares | Jun. 30, 2014USD ($) | |
Share-based compensation | ||||
Stock compensation expense | $ | $ 13,795,000 | $ 9,550,000 | $ 27,696,000 | $ 14,022,000 |
Tax benefit from exercise of stock options and vesting of stock awards - financing cash flow | $ | 3,774,000 | 2,384,000 | ||
Change to additional paid in capital related to tax net benefits (deficiencies) | $ | 3,700,000 | 2,100,000 | ||
Excess tax benefits of tax deductions in recognized stock compensation expenses | $ | 3,800,000 | 2,400,000 | ||
Tax deficiencies and adjustments from exercise of stock options and vesting of stock awards | $ | $ (100,000) | $ (300,000) | ||
Minimum | ||||
Stock options, Non vested restricted stock awards and nonvested restricted stock units | ||||
Estimated forfeitures (as a percent) | 0.00% | 0.00% | ||
Maximum | ||||
Stock options, Non vested restricted stock awards and nonvested restricted stock units | ||||
Estimated forfeitures (as a percent) | 4.00% | 4.00% | ||
Stock options | ||||
Stock options, Non vested restricted stock awards and nonvested restricted stock units | ||||
Grants in period, weighted average grant date fair value (in dollars per share) | $ / shares | $ 14 | |||
Expected volatility (as a percent) | 25.03% | |||
Stock option activity | ||||
Outstanding, beginning of period (in shares) | 3,321,063 | |||
Granted (in shares) | 805,428 | |||
Forfeited (in shares) | (96,616) | |||
Exercised (in shares) | (1,047,036) | |||
Outstanding, end of period (in shares) | 2,982,839 | 2,982,839 | ||
Vested and expected to vest end of period (in shares) | 2,941,497 | 2,941,497 | ||
Exercisable, end of period (in shares) | 1,401,219 | 1,401,219 | ||
Weighted average exercise price of stock options | ||||
Outstanding, beginning of period (in dollars per share) | $ / shares | $ 50.58 | |||
Granted (in dollars per share) | $ / shares | 64 | |||
Forfeited (in dollars per share) | $ / shares | 60.02 | |||
Exercised (in dollars per share) | $ / shares | 47.22 | |||
Outstanding, end of period (in dollars per share) | $ / shares | $ 55.08 | 55.08 | ||
Vested and expected to vest end of period (in dollars per share) | $ / shares | 54.99 | 54.99 | ||
Exercisable, end of period (in dollars per share) | $ / shares | $ 49.27 | $ 49.27 | ||
Assumptions used for estimating value of awards granted | ||||
Vesting period | 3 years | |||
Life of options (Expiration period) | 10 years | |||
Restricted stock awards | ||||
Nonvested restricted stock awards and units | ||||
Outstanding, beginning of period (in shares) | 1,626,827 | |||
Awarded (in shares) | 20,115 | |||
Vested (in shares) | (94,547) | |||
Outstanding, end of period (in shares) | 1,552,395 | 1,552,395 | ||
Weighted average exercise price of nonvested restricted stock award and units | ||||
Outstanding, beginning of period (in dollars per share) | $ / shares | $ 57.66 | |||
Awarded (in dollars per share) | $ / shares | 67.12 | |||
Vested (in dollars per share) | $ / shares | 57.48 | |||
Outstanding, ending of period (in dollars per share) | $ / shares | $ 57.79 | $ 57.79 | ||
Restricted stock awards | Minimum | ||||
Assumptions used for estimating value of awards granted | ||||
Vesting period | 12 months | |||
Restricted stock awards | Maximum | ||||
Assumptions used for estimating value of awards granted | ||||
Vesting period | 42 months | |||
Restricted Stock Units (RSUs) | ||||
Assumptions used for estimating value of awards granted | ||||
Vesting period | 3 years | |||
Nonvested restricted stock awards and units | ||||
Outstanding, beginning of period (in shares) | 156,695 | |||
Awarded (in shares) | 172,810 | |||
Vested (in shares) | (78,036) | |||
Forfeited (in shares) | (12,103) | |||
Outstanding, end of period (in shares) | 239,366 | 239,366 | ||
Weighted average exercise price of nonvested restricted stock award and units | ||||
Outstanding, beginning of period (in dollars per share) | $ / shares | $ 54.88 | |||
Awarded (in dollars per share) | $ / shares | 63.95 | |||
Vested (in dollars per share) | $ / shares | 52.89 | |||
Forfeited (in dollars per share) | $ / shares | 60.41 | |||
Outstanding, ending of period (in dollars per share) | $ / shares | $ 61.80 | $ 61.80 | ||
Performance Based Restricted Stock Units ("PSUs") | ||||
Assumptions used for estimating value of awards granted | ||||
Expected dividend yield (as a percent) | 0.00% | |||
Risk-free interest rate (as a percent) | 1.00% | |||
Expected volatility, minimum (as a percent) | 15.00% | |||
Expected volatility, maximum (as a percent) | 52.00% | |||
Expected volatility, average (as a percent) | 28.00% | |||
Vesting period | 3 years | |||
Number of trading days considered for average share value | 30 | |||
Number of companies in peer group | company | 54 | |||
Nonvested restricted stock awards and units | ||||
Awarded (in shares) | 43,900 | |||
Forfeited (in shares) | (2,472) | |||
Estimated fair value | $ | $ 85 | |||
Performance Based Restricted Stock Units ("PSUs") | Minimum | ||||
Assumptions used for estimating value of awards granted | ||||
Percentage of shares to be settled | 0.00% | |||
Performance Based Restricted Stock Units ("PSUs") | Maximum | ||||
Assumptions used for estimating value of awards granted | ||||
Percentage of shares to be settled | 200.00% |
General (Details 11)
General (Details 11) - USD ($) $ in Millions | Sep. 30, 2014 | Jul. 23, 2014 | Jun. 30, 2015 | Dec. 31, 2014 |
Debt disclosures | ||||
Capital lease obligations | $ 24.6 | $ 24.6 | ||
Revolving Loan borrowings | ||||
Debt disclosures | ||||
Revolving borrowings outstanding | 0 | 0 | ||
Letter of Credit | ||||
Debt disclosures | ||||
Letters of credit outstanding | 33.4 | $ 32.9 | ||
Term Loan | ||||
Long-term Debt and Capital Lease Obligations | ||||
Amount of term loan borrowings outstanding | 240.6 | |||
Long-term Debt, Fiscal Year Maturity | ||||
2,015 | 6.2 | |||
2,016 | 15.6 | |||
2,017 | 25 | |||
2,018 | 25 | |||
2,019 | $ 168.8 | |||
Credit Facility 2014 | ||||
Long-term Debt and Capital Lease Obligations | ||||
Maximum borrowing capacity | $ 500 | |||
Term of option to extend credit facility | 1 year | |||
Credit Facility 2014 | Revolving Loan borrowings | ||||
Long-term Debt and Capital Lease Obligations | ||||
Maximum borrowing capacity | $ 250 | |||
Commitment commission (as a percent) | 0.20% | |||
Credit Facility 2014 | Letter of Credit | ||||
Long-term Debt and Capital Lease Obligations | ||||
Maximum borrowing capacity | 70 | |||
Stated interest rate (as a percent) | 1.625% | |||
Credit Facility 2014 | Term Loan | ||||
Long-term Debt and Capital Lease Obligations | ||||
Maximum borrowing capacity | $ 250 | |||
Credit Facility 2014 | Revolving and Term Loan Borrowings | ||||
Long-term Debt and Capital Lease Obligations | ||||
Borrowing margin (as a percent) | 0.50% | |||
Credit Facility 2014 | Overnight Federal Funds rate | Revolving and Term Loan Borrowings | ||||
Long-term Debt and Capital Lease Obligations | ||||
Basis spread on variable rate (as a percent) | 0.50% | |||
Credit Facility 2014 | Eurodollar rate for one month | Revolving and Term Loan Borrowings | ||||
Long-term Debt and Capital Lease Obligations | ||||
Basis spread on variable rate (as a percent) | 1.00% | |||
Credit Facility 2014 | Eurodollar denominated loans | Eurodollar rate for selected interest period | Term Loan | ||||
Long-term Debt and Capital Lease Obligations | ||||
Proceeds from issuance of debt | $ 250 | |||
Effective borrowing margin (as a percent) | 1.50% | |||
Effective interest rate (as a percent) | 1.6866% | |||
Weighted average interest rate (as a percent) | 1.676% | |||
Credit Facility 2014 | Eurodollar denominated loans | Eurodollar rate for selected interest period | Revolving and Term Loan Borrowings | ||||
Long-term Debt and Capital Lease Obligations | ||||
Borrowing margin (as a percent) | 1.50% |
General (Details 12)
General (Details 12) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | |
Redeemable Non-Controlling Interest disclosures | ||
Redeemable Non-controlling interest | $ 8,198 | $ 5,957 |
Alpha Care Holdings Inc. | ||
Redeemable Non-Controlling Interest disclosures | ||
Percentage of ownership held by reporting entity | 82.00% | |
Percentage of remaining shares which the entity may be required to purchase in the event of exercise of put options by other shareholders | 50.00% | |
Redeemable Non-controlling interest | $ 8,200 | $ 5,900 |
Increase (Reduction) in carrying value as a result of operating income (losses) | $ 2,300 |
Net Income per Common Share A32
Net Income per Common Share Attributable to Magellan Helath Services, Inc (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Numerator: | ||||
Net income attributable to Magellan Health, Inc. | $ 4,643 | $ 4,986 | $ 11,931 | $ 30,706 |
Denominator: | ||||
Weighted average number of common shares outstanding-basic (in shares) | 25,684 | 27,144 | 25,502 | 27,257 |
Common stock equivalents-stock options (in shares) | 362 | 554 | 406 | 574 |
Common stock equivalents-RSAs (in shares) | 654 | 66 | 584 | 49 |
Common stock equivalents-RSUs (in shares) | 26 | 36 | 27 | |
Common stock equivalents- PSUs( in shares) | 49 | 58 | ||
Common stock equivalents-employee stock purchase plan (in shares) | 1 | 1 | 2 | 1 |
Weighted average number of common shares outstanding-diluted (in shares) | 26,776 | 27,765 | 26,588 | 27,908 |
Net income attributable to Magellan Health, Inc. per common share-basic (in dollars per share) | $ 0.18 | $ 0.18 | $ 0.47 | $ 1.13 |
Net income attributable to Magellan Health, Inc. per common share-diluted (in dollars per share) | $ 0.17 | $ 0.18 | $ 0.45 | $ 1.10 |
Potential dilutive securities excluded from computation of dilutive securities (in shares) | 800 | 700 | 900 | 500 |
Business Segment Information (D
Business Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Operating results by business segment | ||||
Managed care and other revenue | $ 776,240 | $ 682,274 | $ 1,524,890 | $ 1,511,865 |
PBM and dispensing revenue | 381,367 | 205,740 | 613,685 | 342,624 |
Cost of care | (568,288) | (481,617) | (1,090,616) | (1,087,325) |
Cost of goods sold | (361,409) | (192,566) | (579,616) | (317,864) |
Direct service costs and other | (191,455) | (179,034) | (395,905) | (343,756) |
Stock compensation expense | 13,795 | 9,550 | 27,696 | 14,022 |
Changes in fair value of contingent consideration | 2,567 | 17,536 | ||
Less: non-controlling interest segment profit (loss) | (350) | (648) | (444) | (1,978) |
Segment profit (loss) | 53,167 | 44,995 | 118,114 | 121,544 |
Operating segments | Commercial | ||||
Operating results by business segment | ||||
Managed care and other revenue | 150,658 | 198,025 | 303,183 | 386,916 |
Cost of care | (88,200) | (116,852) | (170,330) | (228,054) |
Direct service costs and other | (37,915) | (42,530) | (77,125) | (82,806) |
Stock compensation expense | 233 | 157 | 404 | 312 |
Changes in fair value of contingent consideration | 71 | 171 | ||
Segment profit (loss) | 24,847 | 38,800 | 56,303 | 76,368 |
Operating segments | Public Sector | ||||
Operating results by business segment | ||||
Managed care and other revenue | 439,858 | 319,954 | 862,835 | 817,897 |
Cost of care | (380,580) | (275,108) | (727,510) | (697,626) |
Direct service costs and other | (49,944) | (45,391) | (101,331) | (88,349) |
Stock compensation expense | 240 | 230 | 549 | 504 |
Less: non-controlling interest segment profit (loss) | (273) | (648) | (393) | (1,978) |
Segment profit (loss) | 9,847 | 333 | 34,936 | 34,404 |
Operating segments | Specialty Solutions | ||||
Operating results by business segment | ||||
Managed care and other revenue | 132,227 | 119,326 | 256,569 | 224,760 |
Cost of care | (99,508) | (89,753) | (192,781) | (163,405) |
Direct service costs and other | (19,913) | (17,897) | (40,087) | (33,038) |
Stock compensation expense | 21 | 354 | 530 | 768 |
Segment profit (loss) | 12,827 | 12,030 | 24,231 | 29,085 |
Operating segments | Pharmacy Management | ||||
Operating results by business segment | ||||
Managed care and other revenue | 53,782 | 44,969 | 102,850 | 100,347 |
PBM and dispensing revenue | 408,924 | 209,265 | 667,717 | 348,889 |
Cost of care | 96 | 5 | (16,295) | |
Cost of goods sold | (387,828) | (196,080) | (631,366) | (324,111) |
Direct service costs and other | (56,430) | (41,605) | (119,978) | (77,156) |
Stock compensation expense | 10,016 | 5,556 | 18,872 | 5,859 |
Changes in fair value of contingent consideration | 2,496 | 17,365 | ||
Segment profit (loss) | 30,960 | 22,201 | 55,465 | 37,533 |
Corporate and Elimination | ||||
Operating results by business segment | ||||
Managed care and other revenue | (285) | (547) | (18,055) | |
PBM and dispensing revenue | (27,557) | (3,525) | (54,032) | (6,265) |
Cost of care | 18,055 | |||
Cost of goods sold | 26,419 | 3,514 | 51,750 | 6,247 |
Direct service costs and other | (27,253) | (31,611) | (57,384) | (62,407) |
Stock compensation expense | 3,285 | 3,253 | 7,341 | 6,579 |
Less: non-controlling interest segment profit (loss) | (77) | (51) | ||
Segment profit (loss) | $ (25,314) | $ (28,369) | $ (52,821) | $ (55,846) |
Business Segment Information 34
Business Segment Information (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Reconciliation of segment profit to income before income taxes | ||||
Segment profit | $ 53,167 | $ 44,995 | $ 118,114 | $ 121,544 |
Stock compensation expense | (13,795) | (9,550) | (27,696) | (14,022) |
Changes in fair value of contingent consideration | (2,567) | (17,536) | ||
Non-controlling interest segment profit (loss) | (350) | (648) | (444) | (1,978) |
Depreciation and amortization | (25,022) | (22,480) | (48,518) | (42,709) |
Interest expense | (1,653) | (2,004) | (3,279) | (2,840) |
Interest income | 500 | 275 | 966 | 586 |
Income before income taxes | $ 10,280 | $ 10,588 | $ 21,607 | $ 60,581 |
Commitments and Contingencies35
Commitments and Contingencies (Details) - October 2014 Share Repurchase Program - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 6 Months Ended | 7 Months Ended | ||
Jul. 22, 2015 | Dec. 31, 2014 | Jun. 30, 2015 | Jun. 30, 2015 | Oct. 22, 2014 | |
Stock Repurchases | |||||
Amount authorized under stock repurchase plan | $ 200 | ||||
Share repurchases made in open market (in shares) | 113,160 | 232,170 | 1,062,197 | 1,294,367 | |
Average Price Paid per Share (in dollars per share) | $ 60.65 | $ 64.48 | |||
Aggregate Cost | $ 7.8 | $ 14.1 | $ 68.5 | $ 82.6 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Thousands | Apr. 01, 2015 | Jun. 30, 2015 | Dec. 31, 2014 |
Assets acquired: | |||
Goodwill | $ 623,827 | $ 566,106 | |
Acquisition disclosures | |||
Changes in fair value: Increase (Decrease) in contingent consideration | 17,536 | ||
Payments on contingent consideration | (5,000) | ||
Fair value of the short term contingent consideration | 26,400 | ||
4D Pharmacy Management Systems, Inc. | |||
Acquisitions | |||
Amount of consideration paid in cash | $ 55,000 | ||
Assets acquired: | |||
Current assets | 35,638 | ||
Property and equipment, net | 238 | ||
Other identified intangible assets | 24,600 | ||
Goodwill | 49,058 | ||
Total assets acquired | 109,534 | ||
Liabilities assumed: | |||
Current liabilities | 33,699 | ||
Contingent consideration | 19,269 | ||
Total liabilities assumed | 52,968 | ||
Net assets acquired | 56,566 | ||
Acquisition disclosures | |||
Maximum potential contingent payments | 30,000 | ||
Working capital payable | 300 | ||
Estimated undiscounted future contingent payments | 20,600 | 17,000 | |
Changes in fair value: Increase (Decrease) in contingent consideration | (3,600) | ||
Payments on contingent consideration | (5,000) | ||
Contingent consideration offset amount | 1,400 | ||
Fair value of the short term contingent consideration | 16,200 | ||
Acquisition related costs | 200 | ||
Cumulative acquisition related costs | $ 700 | ||
4D Pharmacy Management Systems, Inc. | Customer contracts | |||
Assets acquired: | |||
Other identified intangible assets | $ 21,100 | ||
Acquisition disclosures | |||
Period of amortization of intangible assets acquired | 10 years | ||
4D Pharmacy Management Systems, Inc. | Non-compete agreements | |||
Assets acquired: | |||
Other identified intangible assets | $ 2,200 | ||
Acquisition disclosures | |||
Period of amortization of intangible assets acquired | 5 years | ||
4D Pharmacy Management Systems, Inc. | Tradenames | |||
Assets acquired: | |||
Other identified intangible assets | $ 1,300 | ||
Acquisition disclosures | |||
Period of amortization of intangible assets acquired | 18 months | ||
4D Pharmacy Management Systems, Inc. | Achievement Of Certain Targets | |||
Acquisition disclosures | |||
Maximum potential contingent payments | $ 10,000 | ||
4D Pharmacy Management Systems, Inc. | Retention of Certain Business | |||
Acquisition disclosures | |||
Maximum potential contingent payments | 20,000 | ||
Cash | 4D Pharmacy Management Systems, Inc. | |||
Assets acquired: | |||
Current assets | 14,178 | ||
Accounts receivable | 4D Pharmacy Management Systems, Inc. | |||
Assets acquired: | |||
Current assets | $ 21,400 |
Acquisitions (Details 2)
Acquisitions (Details 2) - USD ($) $ in Millions | Jan. 31, 2015 | Apr. 30, 2014 | Jun. 30, 2015 | Dec. 31, 2013 |
Alpha Care Holdings Inc. | ||||
Acquisitions | ||||
Percentage of equity interest acquired | 65.00% | |||
Amount of additional Preferred Shares purchased | $ 23.6 | |||
Percentage of ownership held | 82.00% | |||
Voting interest of remaining shareholders | 18.00% | |||
CDMI | ||||
Acquisitions | ||||
Amount of consideration paid in cash | $ 201 | |||
Reduction to consideration paid due to net receipts received for working capital adjustments | 4 | |||
Acquisition disclosures | ||||
Maximum potential contingent payments | $ 165 | |||
HSM | ||||
Acquisitions | ||||
Amount of consideration paid in cash | $ 13.5 |