Magellan Health (MGLN) 10-Q 26 Apr 18 2018 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	3 Months Ended
	Mar. 31, 2018shares
Document and Entity Information
Entity Registrant Name	MAGELLAN HEALTH INC
Entity Central Index Key	19,411
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
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	24,627,170
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q1

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Current Assets:
Cash and cash equivalents ($229,013 and $170,575 restricted at December 31, 2017 and March 31, 2018, respectively)	$ 394,326	$ 398,732
Accounts receivable, net	748,060	660,775
Short-term investments ($219,111 and $265,112 restricted at December 31, 2017 and March 31, 2018, respectively)	329,710	310,578
Pharmaceutical inventory	37,878	40,945
Other current assets ($41,121 and $49,939 restricted at December 31, 2017 and March 31, 2018, respectively)	108,872	72,323
Total Current Assets	1,618,846	1,483,353
Property and equipment, net	159,857	158,638
Long-term investments ($17,287 and $20,811 restricted at December 31, 2017 and March 31, 2018, respectively)	20,811	17,287
Deferred income taxes	1,128	813
Other long-term assets	21,489	22,567
Goodwill	1,013,313	1,006,288
Other intangible assets, net	256,293	268,288
Total Assets	3,091,737	2,957,234
Current Liabilities:
Accounts payable	73,084	74,300
Accrued liabilities	246,909	193,635
Short-term contingent consideration	6,892	6,892
Medical claims payable	390,098	327,625
Other medical liabilities	207,220	177,002
Current debt and capital lease obligations	61,498	112,849
Total Current Liabilities	985,701	892,303
Long-term debt and capital lease obligations	736,688	740,888
Deferred income taxes	11,170	12,298
Tax contingencies	14,743	14,226
Long-term contingent consideration	2,158	1,925
Deferred credits and other long-term liabilities	36,148	19,100
Total Liabilities	1,786,608	1,680,740
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01 per share Authorized—10,000 shares at December 31, 2017 and March 31, 2018-Issued and outstanding-none
Ordinary common stock, par value $.01 per share Authorized-100,000 shares at December 31, 2017 and March 31, 2018-Issued and outstanding-52,973 and 24,202 shares at December 31, 2017, respectively, and 53,398 and 24,627 shares at March 31, 2018, respectively	534	530
Other Stockholders' Equity:
Additional paid-in capital	1,296,536	1,274,811
Retained earnings	1,406,720	1,399,495
Accumulated other comprehensive loss	(699)	(380)
Treasury stock, at cost, 28,771 and 28,771 shares at December 31, 2017 and March 31, 2018, respectively	(1,397,962)	(1,397,962)
Total Stockholders' Equity	1,305,129	1,276,494
Total Liabilities and Stockholders' Equity	$ 3,091,737	$ 2,957,234

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
CONSOLIDATED BALANCE SHEETS
Restricted cash and cash equivalents	$ 170,575	$ 229,013
Short-term restricted investments (in dollars)	265,112	219,111
Other current restricted assets (in dollars)	49,939	41,121
Long term restricted investments (in dollars)	$ 20,811	$ 17,287
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized shares	10,000	10,000
Preferred stock, issued shares	0	0
Preferred stock, outstanding shares	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized shares	100,000	100,000
Common stock, issued shares	53,398	52,973
Common stock, outstanding shares	24,627	24,202
Ordinary common stock in treasury, shares	28,771	28,771

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Net revenue:
Net revenue	$ 1,805,077	$ 1,305,623
Costs and expenses:
Cost of care	928,661	482,054
Cost of goods sold	559,665	542,633
Direct service costs and other operating expenses	269,077	221,486
Depreciation and amortization	30,407	26,976
Interest expense	8,366	4,148
Interest and other income	(2,476)	(949)
Total costs and expenses	1,793,700	1,276,348
Income before income taxes	11,377	29,275
Provision (benefit) for income taxes	(75)	11,806
Net income	11,452	17,469
Less: net loss attributable to non-controlling interest		(278)
Net income attributable to Magellan	$ 11,452	$ 17,747
Net income attributable to Magellan per common share:
Basic (in dollars per share)	$ 0.47	$ 0.77
Diluted (in dollars per share)	$ 0.45	$ 0.74
Managed care and other
Net revenue:
Net revenue	$ 1,219,763	$ 729,340
PBM
Net revenue:
Net revenue	$ 585,314	$ 576,283

CONSOLIDATED STATEMENTS OF INC5

CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
CONSOLIDATED STATEMENTS OF INCOME
Stock compensation expense	$ 7,646	$ 10,140
Changes in fair value of contingent consideration	$ 233	$ (49)

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 11,452	$ 17,469
Other comprehensive income:
Unrealized loss on available-for-sale securities	(319)	(21)
Comprehensive income	11,133	17,448
Less: comprehensive loss attributable to non-controlling interest		(278)
Comprehensive income attributable to Magellan	$ 11,133	$ 17,726

CONSOLIDATED STATEMENTS OF COM7

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net of income tax benefit	$ 101	$ 12

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities:
Net income	$ 11,452	$ 17,469
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	30,407	26,976
Non-cash interest expense	307	253
Non-cash stock compensation expense	7,646	10,140
Non-cash income tax (benefit) provision	62	(1,010)
Non-cash amortization on investments	809	1,112
Changes in assets and liabilities, net of effects from acquisitions of businesses:
Accounts receivable, net	(87,178)	(27,699)
Pharmaceutical inventory	3,067	(3,379)
Other assets	(37,914)	(1,172)
Accounts payable and accrued liabilities	26,529	(52,838)
Medical claims payable and other medical liabilities	107,569	(5,160)
Contingent consideration	233	(49)
Tax contingencies	448	506
Deferred credits and other long-term liabilities	17,685	4,150
Other	(90)	(421)
Net cash (used in) provided by operating activities	81,032	(31,122)
Cash flows from investing activities:
Capital expenditures	(19,502)	(10,939)
Acquisitions and investments in businesses, net of cash acquired		(200)
Purchase of investments	(142,886)	(141,432)
Maturity of investments	118,999	131,840
Net cash used in investing activities	(43,389)	(20,731)
Cash flows from financing activities:
Proceeds from issuance of debt		200,000
Proceeds from exercise of stock options	16,897	4,945
Payments on debt and capital lease obligations	(55,895)	(182,738)
Other	(3,051)	(1,275)
Net cash provided by (used in) financing activities	(42,049)	20,932
Net decrease in cash and cash equivalents	(4,406)	(30,921)
Cash and cash equivalents at beginning of period	398,732	304,508
Cash and cash equivalents at end of period	394,326	273,587
Non-cash investing activities:
Property and equipment acquired under capital leases	$ 51	$ 906

General

General	3 Months Ended
	Mar. 31, 2018
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 months ended March 31, 2018 are not necessarily indicative of the results to be expected for the full year. All significant intercompany accounts and transactions have been eliminated in consolidation. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2017 and the notes thereto, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2018. Business Overview The Company is a leader within the healthcare management business, and is focused on delivering innovative specialty solutions for the fastest growing, most complex areas of health, including special populations, complete pharmacy benefits, and other specialty carve-out areas of healthcare. The Company develops innovative solutions that combine advanced analytics, agile technology and clinical excellence to drive better decision making, positively impact members’ health outcomes and optimize the cost of care for the customers we serve. The Company provides services to health plans and other managed care organizations (“MCOs”), employers, labor unions, various military and governmental agencies and third party administrators (“TPAs”). Magellan operates three segments: Healthcare, Pharmacy Management and Corporate. Healthcare The Healthcare segment (“Healthcare”) consists of two reporting units – Commercial and Government. The Commercial reporting unit’s customers include health plans, accountable care organizations (“ACOs”), and employers for whom Magellan provides carve-out management services for behavioral health, employee assistance plans (“EAP”), and other areas of specialty healthcare including diagnostic imaging, musculoskeletal management, cardiac, and physical medicine. These management services are applied to a health plan’s or ACO’s entire book of business including commercial, Medicaid and Medicare members or targeted complex populations. The Government reporting unit contracts with local, state and federal governmental agencies to provide services to recipients under Medicaid, Medicare and other government programs. Currently these management services include behavioral health and EAP. The management of total medical cost, as well as long term support services, for special populations is delivered through Magellan Complete Care (“MCC”). These special populations include individuals with serious mental illness (“SMI”), dual eligibles, aged, blind and disabled (“ABD”) and other populations with unique and often complex healthcare needs. Magellan’s coordination and management of these healthcare and long term support services are provided through its comprehensive network of medical and behavioral health professionals, clinics, hospitals, skilled nursing facilities, home care agencies and ancillary service providers. This network of credentialed providers is integrated with clinical and quality improvement programs to improve access to care and enhance the healthcare experience for individuals in need of care, while at the same time making the cost of these services more affordable for our customers. The Company generally does not directly provide or own any provider of treatment services, although it does employ licensed behavioral health counselors to deliver non‑medical counseling under certain government contracts. The Company provides its Healthcare management services primarily through: (i) risk‑based products, where the Company assumes all or a substantial portion of the responsibility for the cost of providing treatment services in exchange for a fixed per member per month fee, or (ii) administrative services only (“ASO”) products, where the Company provides services such as utilization review, claims administration and/or provider network management, but does not assume full responsibility for the cost of the treatment services, in exchange for an administrative fee and, in some instances, a gain share. Pharmacy Management The Pharmacy Management segment (“Pharmacy Management”) is comprised of products and solutions that provide clinical and financial management of pharmaceuticals paid under both the medical and the pharmacy benefit. Pharmacy Management’s services include: (i) pharmacy benefit management (“PBM”) services, including pharmaceutical dispensing operations; (ii) pharmacy benefit administration (“PBA”) for state Medicaid and other government sponsored programs; (iii) clinical and formulary management programs; (iv) medical pharmacy management programs; and (v) programs for the integrated management of specialty drugs across both the medical and pharmacy benefit that treat complex conditions, regardless of site of service, method of delivery, or benefit reimbursement. These services are available individually, in combination, or in a fully integrated manner. The Company markets its pharmacy management services to health plans, employers, third party administrators, managed care organizations, state governments, Medicare Part D, and other government agencies, exchanges, brokers and consultants. In addition, the Company will continue to upsell its pharmacy products to its existing customers and market its pharmacy solutions to the Healthcare customer base. Pharmacy Management contracts with its customers for services using risk‑based, gain share or ASO arrangements. In addition, Pharmacy Management provides services to the Healthcare segment for its MCC business. Corporate This segment of the Company is comprised primarily of amounts not allocated to the Healthcare and Pharmacy Management segments that are largely associated with costs related to being a publicly traded company. Summary of Significant Accounting Policies Recent Accounting Pronouncements In 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. The FASB also issued various ASUs which subsequently amended ASU 2014-09. These amendments and ASU 2014-09, collectively known as Accounting Standard Codification 606 (“ASC 606”), are effective for annual and interim reporting periods of public entities beginning after December 15, 2017. The Company adopted ASC 606 on a modified retrospective basis on January 1, 2018. The Company applied the standard to contracts not completed at the date of initial application. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. For contracts that were modified before January 1, 2018 the Company has not retrospectively restated the contracts for those modifications in accordance with the contract modification guidance, instead the Company reflected the aggregate effect of those modifications when identifying the satisfied and unsatisfied performance obligations, determining the transaction price and allocating the transaction price to the satisfied and unsatisfied performance obligation. Given the nature of our arrangements, the Company does not believe the use of this practical expedient had a significant impact on the results of our adoption. A majority of our managed care revenue continues to be recognized over the applicable coverage period on a per member basis for covered members. In addition a majority of the PBM revenue continues to be recognized as the claims are adjudicated or when the drugs are dispensed. The main impacts of ASC 606 to the Company’s business relate to the timing of revenue recognition in relation to upfront fees in certain PBA contracts, as well as performance incentive, performance guarantee and risk share arrangements. Some of the Company’s PBA contracts contain upfront fees, which under ASC 605 were amortized over the life of the contract. Under ASC 606, these upfront fees constitute a material right and are amortized over the anticipated life of the customer. Certain contracts include performance incentive, performance guarantee and risk share arrangements, which under ASC 605 were recorded based on calculations using the current period’s data. Under ASC 606, the revenues are recognized on a probability weighted approach based on anticipated outcomes for the performance period. In addition, under ASC 606 the accounting for material rights in relation to some of the Company’s government contracts will impact the consolidated balance sheets for interim reporting periods. The cumulative effect of changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASU 2014-09 were as follows (in thousands): Balance at December 31, 2017 Adjustments Due to ASC 606 Balance at January 1, 2018 Assets Other current assets $ 72,323 $ (667) $ 71,656 Total Current Assets 1,483,353 (667) 1,482,686 Deferred income taxes 813 1,335 2,148 Other long-term assets 22,567 (1,333) 21,234 Total Assets 2,957,234 (665) 2,956,569 Liabilities and Stockholders' Equity Accrued liabilities 193,635 (2,182) 191,453 Total Current Liabilities 892,303 (2,182) 890,121 Deferred credits and other long-term liabilities 19,100 5,744 24,844 Total Liabilities 1,680,740 3,562 1,684,302 Retained earnings 1,399,495 (4,227) 1,395,268 Total Stockholders' Equity 1,276,494 (4,227) 1,272,267 Total Liabilities and Stockholders' Equity 2,957,234 (665) 2,956,569 The impact of the adoption of ASC 606 on our consolidated balance sheet as of March 31, 2018 was as follows (in thousands): As Reported Adjustments Balance Without ASC 606 Adoption Assets Accounts receivable $ 748,060 $ (28,336) $ 719,724 Other current assets 108,872 (297) 108,575 Total Current Assets 1,618,846 (28,633) 1,590,213 Other long-term assets 21,489 9,483 30,972 Total Assets 3,091,737 (19,150) 3,072,587 Liabilities and Stockholders' Equity Accrued liabilities 246,909 (21,154) 225,755 Total Current Liabilities 985,701 (21,154) 964,547 Deferred credits and other long-term liabilities 36,148 (6,289) 29,859 Total Liabilities 1,786,608 (27,443) 1,759,165 Retained earnings 1,406,720 8,293 1,415,013 Total Stockholders' Equity 1,305,129 8,293 1,313,422 Total Liabilities and Stockholders' Equity 3,091,737 (19,150) 3,072,587 The impact of the adoption of ASC 606 on our consolidated income statement for the three months ended March 31, 2018 was as follows (in thousands): As Reported Adjustments Balance Without ASC 606 Adoption Managed care and other $ 1,219,763 $ (2,755) $ 1,217,008 PBM 585,314 6,450 591,764 Total net revenue 1,805,077 3,695 1,808,772 Income before income taxes 11,377 3,695 15,072 (Benefit) provision for income taxes (75) 964 889 Net income 11,452 2,731 14,183 Net income attributable to Magellan 11,452 2,731 14,183 In February 2016, the FASB issued ASU No. 2016‑02, “Leases” (“ASU 2016‑02”). This ASU amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets. This guidance is effective for annual and interim reporting periods of public entities beginning after December 15, 2018, with early adoption permitted. The Company is currently assessing the impact of adoption, but believes the effect of this ASU will have a material effect on the Company’s consolidated balance sheets. 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 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). This ASU amends the accounting on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. This guidance is effective for annual and interim periods of public entities beginning after December 15, 2019, with early adoption permitted for fiscal years beginning after December 31, 2018. The Company is currently assessing the potential impact this ASU will have on the Company’s consolidated results of operation, financial position and cash flows. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). This ASU makes eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. This guidance is effective for annual and interim periods of public entities beginning after December 15, 2017 and was adopted by the Company in the quarter ended March 31, 2018. The effect of this guidance was immaterial to the Company’s consolidated results of operations, financial position and cash flows. In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory” (“ASU 2016-16”). The amendments in this ASU require that entities recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This guidance is effective for annual and interim periods of public entities beginning after December 15, 2017 and was adopted by the Company in the quarter ended March 31, 2018. The effect of this guidance was immaterial to the Company’s consolidated results of operations, financial position and cash flows. In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2017-01”). The amendments in this ASU clarify whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance is effective for annual and interim periods of public entities beginning after December 15, 2017 and was adopted by the Company in the quarter ended March 31, 2018. The effect of this guidance was immaterial to the Company’s consolidated results of operations, financial position and cash flows. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). The amendments in this ASU eliminate the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. This guidance is effective for annual and interim periods of public entities beginning after December 15, 2019, with early adoption permitted. The Company is currently assessing the potential impact this ASU will have on the Company’s consolidated results of operations, financial position and cash flows. In May 2017, the FASB issued ASU No. 2017-09, “Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting” (“ASU 2017-09”). The amendments in this ASU include guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. This guidance is effective for annual and interim periods of public entities beginning after December 15, 2017 and was adopted by the Company in the quarter ended March 31, 2018. The effect of this guidance was immaterial to the Company’s consolidated results of operations, financial position and cash flows. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates of the Company 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. In addition, the Company makes significant estimates in relation to revenue recognition under ASC 606 which are explained in more detail in “ Revenue Recognition ” below. Actual results could differ from those estimates. Revenue Recognition Virtually all of the Company’s revenues are derived from business in North America. The following table disaggregates our revenue by major service line, type of customer and timing of revenue recognition (in thousands): Three months ended March 31, 2018 Healthcare Pharmacy Management Elimination Total Major Service Lines Commercial Risk-based, non-EAP $ 234,391 $ — $ — $ 234,391 EAP risk-based 12,421 — — 12,421 ASO 52,569 7,300 (145) 59,724 Government Risk-based, non-EAP 752,490 — — 752,490 EAP risk-based 82,237 — — 82,237 ASO 23,493 — — 23,493 PBM, including dispensing — 533,792 (46,884) 486,908 Medicare Part D — 98,406 — 98,406 PBA — 33,546 — 33,546 Formulary management — 20,377 — 20,377 Other — 1,084 — 1,084 Total net revenue $ 1,157,601 $ 694,505 $ (47,029) $ 1,805,077 Type of Customer Government $ 858,220 $ 228,049 $ — $ 1,086,269 Non-government 299,381 466,456 (47,029) 718,808 Total net revenue $ 1,157,601 $ 694,505 $ (47,029) $ 1,805,077 Timing of Revenue Recognition Transferred at a point in time $ — $ 632,198 $ (46,884) $ 585,314 Transferred over time 1,157,601 62,307 (145) 1,219,763 Total net revenue $ 1,157,601 $ 694,505 $ (47,029) $ 1,805,077 Per Member Per Month (“PMPM”) Revenue. Almost all of the Healthcare revenue and a small portion of the Pharmacy Management revenue is paid on a PMPM basis. PMPM revenue is inclusive of revenue from the Company’s risk, EAP and ASO contracts and primarily relates to managed care contracts for services such as the provision of behavioral healthcare, specialty healthcare, pharmacy management, or fully integrated healthcare services. PMPM contracts generally have a term of one year or longer, with the exception of government contracts where the customer can terminate with as little as 30 days’ notice for no significant penalty. All managed care contracts have a single performance obligation that constitutes a series for the provision of managed healthcare services for a population of enrolled members for the duration of the contract. The transaction price for PMPM contracts is entirely variable as it primarily includes per member per month fees associated with unspecified membership that fluctuates throughout the contract. In certain contracts, PMPM fees also include adjustments for things such as performance incentives, performance guarantees and risk shares. The Company generally estimates the transaction price using an expected value methodology and amounts are only included in the net transaction price to the extent that it is probable that a significant reversal of cumulative revenue will not occur once any uncertainty is resolved. The majority of the Company’s net PMPM transaction price relates specifically to its efforts to transfer the service for a distinct increment of the series (e.g. day or month) and is recognized as revenue in the month in which members are entitled to service. The remaining transaction price is recognized over the contract period (or portion of the series to which it specifically relates) based upon estimated membership as a measure of progress. Pharmacy Benefit Management Revenue. The Company’s customers for PBM business, including pharmaceutical dispensing operations, are generally comprised of MCOs, employer groups and health plans. PBM relationships generally have an expected term of one year or longer. A master services arrangement (“MSA”) is executed by the Company and the customer, which outlines the terms and conditions of the PBM services to be provided. When a member in the customer’s organization submits a prescription, a claim is created which is presented for approval. The acceptance of each individual claim creates enforceable rights and obligations for each party and represents a separate contract. For each individual claim, the performance obligations are limited to the processing and adjudication of the claim, or dispensing of the products purchased. Generally, the transaction price for PBM services is explicitly listed in each contract and does not represent variable consideration. The Company recognizes PBM revenue, which consists of a negotiated prescription price (ingredient cost plus dispensing fee), co‑payments and any associated administrative fees, when claims are adjudicated or the drugs are shipped. The Company recognizes PBM revenue on a gross basis (i.e. including drug costs and co‑payments) as it is acting as the principal in the arrangement, controls the underlying service, and is contractually obligated to its clients and network pharmacies, which is a primary indicator of gross reporting. In addition, the Company is solely responsible for the claims adjudication process, negotiating the prescription price for the pharmacy, collection of payments from the client for drugs dispensed by the pharmacy, and managing the total prescription drug relationship with the client’s members. If the Company enters into a contract where it is only an administrator, and does not assume any of the risks previously noted, revenue will be recognized on a net basis. For dispensing, at the time of shipment, the earnings process is complete; the obligation of the Company’s customer to pay for the specialty pharmaceutical drugs is fixed, and, due to the nature of the product, the member may neither return the specialty pharmaceutical drugs nor receive a refund. Medicare Part D. The Company is contracted with the Centers for Medicare and Medicaid (“CMS”) as a Prescription Drug Plan (“PDP”) to provide prescription drug benefits to Medicare beneficiaries. The accounting for Medicare Part D revenue is primarily the same as that for PBM, as previously discussed. However, there is certain variable consideration present only in Medicare Part D arrangements. The Company estimates the annual amount of variable consideration using a most likely amount methodology, which is allocated to each reporting period based upon actual utilization as a percentage of estimated utilization for the year. Amounts estimated throughout the year for interim reporting are substantially resolved and fixed as of December 31 st , the end of the plan year. Pharmacy Benefit Administration Revenue. The Company provides Medicaid pharmacy services to states and other government sponsored programs. PBA contracts are generally multi-year arrangements but include language regarding early termination for convenience without material penalty provisions that results in enforceable rights and obligations on a month-to-month basis. In PBA arrangements, the Company is generally paid a fixed fee per month to provide PBA services. In addition, some PBA contracts contain upfront fees that constitute a material right. For contracts without an upfront fee, there is a single performance obligation to stand ready to provide the PBA services required for the contracted period. The Company believes that the customer receives the PBA benefits each day from access to the claims processing activities, and has concluded that a time based measure is appropriate for recognizing PBA revenue. For contracts with an upfront fee, the material right represents an additional performance obligation. Amounts allocated to the material right are initially recorded as a contract liability and recognized as revenue over the anticipated period of benefit of the material right, which generally ranges from 2 to 10 years. Formulary Management Revenue. The Company administers formulary management programs for certain clients through which the Company coordinates the achievement, calculation and collection of rebates and administrative fees from pharmaceutical manufacturers on behalf of clients. Formulary management contracts generally have a term of one year or longer. All formulary management contracts have a single performance obligation that constitutes a series for the provision of rebate services for a drug, with utilization measured and settled on a quarterly basis, for the duration of the arrangement. The Company retains its administrative fee and/or a percentage of rebates that is included in its contract with the client from collecting the rebate from the manufacturer. While the administrative fee and/or the percentage of rebates retained is fixed, there is an unknown quantity of pharmaceutical purchases (utilization) during each quarter, therefore the transaction price itself is variable. The Company uses the expected value methodology to estimate the total rebates earned each quarter based on estimated volumes of pharmaceutical purchases by the Company’s clients during the quarter, as well as historical and/or anticipated retained rebate percentages. The Company does not record as rebate revenue any rebates that are passed through to its clients. In relation to the Company’s PBM business, the Company administers rebate programs through which it receives rebates from pharmaceutical manufacturers that are shared with its customers. The Company recognizes rebates when the Company is entitled to them and when the amounts of the rebates are determinable. The amount recorded for rebates earned by the Company from the pharmaceutical manufacturers is recorded as a reduction of cost of goods sold. Government EAP Risk Based Revenue. The Company has certain contracts with federal customers for the provision of various managed care services, which are classified as government EAP risk based business. These contracts are generally multi-year arrangements. The Company’s federal contracts are reimbursed on either a fixed fee basis or a cost reimbursement basis. The performance obligation on a fixed fee contract is to stand ready to provide the staffing required for the contracted period. For fixed fee contracts, the Company believes the invoiced amount corresponds directly with the value to the customer of the Company’s performance completed to date, therefore the Company is utilizing the “right to invoice” practical expedient, with revenue recognition in the amount for which the Company has the right to invoice. The performance obligation on a cost reimbursement contract is to stand ready to provide the activity or services purchased by the customer, such as the operation of a counseling services group or call center. The performance obligation represents a series for the duration of the arrangement. The reimbursement rate is fixed per the contract, however the level of activity (e.g., number of hours, number of counselors or number of units) is variable. A majority of the Company’s cost reimbursement transaction price relates specifically to its efforts to transfer the service for a distinct increment of the series (e.g. day or month) and is recognized as revenue when the portion of the series for which it relates has been provided (i.e. as the Company provides hours, counselors or units of service). In accordance with ASC 606-10-50-13, the Company is required to include disclosure on its remaining performance obligations as of the end of the current reporting period. Due to the nature of the contracts in the Company’s PBM and Part D business, these reporting requirements are not applicable. The majority of the Company’s remaining contracts meet certain exemptions as defined in ASC 606-10-50-14 through 606-10-50-14A, including (i) performance obligation is part of a contract that has an original expected duration of one year or less; (ii) the right to invoice practical expedient; and (iii) variable consideration related to unsatisfied performance obligations that is allocated entirely to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation, and the terms of that variable consideration relate specifically to our efforts to transfer the distinct service, or to a specific outcome from transferring the distinct service. For the Company’s contracts that pertain to these exemptions: (i) the remaining performance obligations primarily relate to the provision of managed healthcare services to the customers’ membership; (ii) the estimated remaining duration of these performance obligations ranges from the remainder of the current calendar year to three years; and (iii) variable consideration for these contracts primarily includes net per member per month fees associated with unspecified membership that fluctuates throughout the contract. Accounts Receivable, Contract Assets and Contract Liabilities Accounts receivable, contract assets and contract liabilities consisted of the following (in thousands, except percentages): January 1, 2018 March 31, 2018 $ Change % Change Accounts receivable $ 679,269 $ 778,556 $ 99,287 Contract assets 8,564 5,519 (3,045) Contract liabilities - current 14,299 79,251 64,952 Contract liabilities - long-term 12,303 13,192 889 Accounts receivable, which are included in accounts receivable, other current assets and other long-term assets on the consolidated balance sheets, increased by $99.3 million, mainly due to timing. Contract assets, which are included in other current assets on the consolidated balance sheets, decreased by $3.0 million, mainly due to items that became fully earned during the period and shifted to accounts receivable, partially offset by the timing of accrual of certain performance incentives. Contract liabilities – current, which are included in accrued liabilities on the consolidated balance sheets, increased by $65.0 million, mainly due to the timing of receipts related to April 2018 revenues and the timing of material rights generated for some of the Company’s government contracts. Contract liabilities – long-term, which are included in deferred credits and other long-term liabilities on the consolidated balance sheets, increased by $0.9 million, mainly due to receipts for which recognition will be long-term. The Company’s accounts receivable consists of amounts due from customers throughout the United States. Collateral is generally not required. A majority of the Company’s contracts have payment terms in the month of service, or within a few months thereafter. The timing of payments from customers from time to time generate contract assets or contract liabilities, however these amounts are immaterial. Significant Customers Customers exceeding ten percent of the consolidated Company’s net revenues The Company has a contract with the State of Florida to provide integrated healthcare services to Medicaid enrollees in the state of Florida (the “Florida Contract”). The Florida 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 Contract with cause, as defined, upon 24 hour notice and upon 30 days notice for any reason or no reason at all. The Florida Contract generated net revenues of $145.7 million and $152.4 million for the three months ended March 31, 2017 and 2018, respectively. On July 14, 2017, the State of Florida issued an Invitation to Negotiate for a new contract for its Medicaid managed care program to replace the current contract with the Company and to be effective January 1, 2019. On April 24, 2018 the Company was notified by the Florida Agency for Health Care Administration (“AHCA”) that the Company was not selected to negotiate a new contract to serve as a vendor for its Medicaid managed care program. The Company plans to file a protest with AHCA. Customers exceeding te

Net Income per Common Share Att

Net Income per Common Share Attributable to Magellan Health, Inc.	3 Months Ended
	Mar. 31, 2018
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 table reconciles income attributable to common shareholders (numerator) and shares (denominator) used in the computations of net income per share attributable to common shareholders (in thousands, except per share data) for the three months ended March 31: 2017 2018 Numerator: Net income attributable to Magellan $ 17,747 $ 11,452 Denominator: Weighted average number of common shares outstanding—basic 23,012 24,349 Common stock equivalents—stock options 474 806 Common stock equivalents—RSAs 402 24 Common stock equivalents—RSUs 81 77 Common stock equivalents—PSUs 66 353 Common stock equivalents—employee stock purchase plan 3 3 Weighted average number of common shares outstanding—diluted 24,038 25,612 Net income attributable to Magellan per common share—basic $ 0.77 $ 0.47 Net income attributable to Magellan per common share—diluted $ 0.74 $ 0.45 The weighted average number of common shares outstanding for the three months ended March 31, 2017 and 2018 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 March 31, 2017 and 2018 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 0.6 million and 0.2 million options for the three months ended March 31, 2017 and 2018, 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	3 Months Ended
	Mar. 31, 2018
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 A—“General.” The Company evaluates performance of its segments based on profit or loss from operations before stock compensation expense, depreciation and amortization, interest expense, interest and other income, changes in the fair value of contingent consideration recorded in relation to acquisitions, gain on sale of assets, special charges or benefits, and income taxes (“Segment Profit”). Management uses Segment Profit information for internal reporting and control purposes and considers it important in making decisions regarding the allocation of capital and other resources, risk assessment and employee compensation, among other matters. Healthcare subcontracts with Pharmacy Management to provide pharmacy benefits management services for certain of Healthcare’s customers. In addition, Pharmacy Management provides pharmacy benefits management for the Company’s employees covered under its medical plan. As such, revenue, cost of goods sold and direct service costs and other related to these arrangements are eliminated. The Company’s segments are defined in Note A—“General.” The following tables summarize, for the periods indicated, operating results by business segment (in thousands): Corporate Pharmacy and Healthcare Management Elimination Consolidated Three Months Ended March 31, 2017 Managed care and other revenue $ 665,376 $ 64,180 $ (216) $ 729,340 PBM revenue — 606,746 (30,463) 576,283 Cost of care (482,054) — — (482,054) Cost of goods sold — (571,837) 29,204 (542,633) Direct service costs and other (138,968) (75,853) (6,665) (221,486) Stock compensation expense (1) 2,659 5,730 1,751 10,140 Changes in fair value of contingent consideration (1) (49) — — (49) Less: non-controlling interest segment loss (2) (277) — (1) (278) Segment profit (loss) $ 47,241 $ 28,966 $ (6,388) $ 69,819 Corporate Pharmacy and Healthcare Management Elimination Consolidated Three Months Ended March 31, 2018 Managed care and other revenue $ 1,157,601 $ 62,307 $ (145) $ 1,219,763 PBM revenue — 632,198 (46,884) 585,314 Cost of care (928,661) — — (928,661) Cost of goods sold — (604,913) 45,248 (559,665) Direct service costs and other (186,246) (75,586) (7,245) (269,077) Stock compensation expense (1) 2,950 1,485 3,211 7,646 Changes in fair value of contingent consideration (1) 233 — — 233 Segment profit (loss) $ 45,877 $ 15,491 $ (5,815) $ 55,553 (1) Stock compensation expense, changes in the fair value of contingent consideration recorded in relation to acquisitions and impairment of intangible assets are included in direct service costs and other operating expenses; however, these amounts are excluded from the computation of Segment Profit. (2) The non‑controlling portion of AlphaCare’s segment loss is excluded from the computation of Segment Profit. The following table reconciles income before income taxes to Segment Profit (in thousands): Three Months Ended March 31, 2017 2018 Income before income taxes $ 29,275 $ 11,377 Stock compensation expense 10,140 7,646 Changes in fair value of contingent consideration (49) 233 Non-controlling interest segment loss 278 — Depreciation and amortization 26,976 30,407 Interest expense 4,148 8,366 Interest and other income (949) (2,476) Segment Profit $ 69,819 $ 55,553

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2018
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. Regulatory Issues The managed healthcare industry is subject to numerous laws and regulations. The subjects of such laws and regulations cover, but are not limited to, matters such as licensure, accreditation, government healthcare program participation requirements, information privacy and security, reimbursement for patient services, and Medicare and Medicaid fraud and abuse. Over the past several years, government activity has increased with respect to investigations and/or allegations concerning possible violations of fraud and abuse and false claims statutes and/or regulations by healthcare organizations and insurers. Entities that are found to have violated these laws and regulations may be excluded from participating in government healthcare programs, subjected to fines or penalties or required to repay amounts received from the government for previously billed patient services. Compliance with such laws and regulations can be subject to future government review and interpretation, as well as regulatory actions unknown or unasserted at this time. In addition, regulators of certain of the Company’s subsidiaries may exercise certain discretionary rights under regulations including increasing their supervision of such entities, requiring additional restricted cash or other security or seizing or otherwise taking control of the assets and operations of such subsidiaries. The Company is subject to certain federal laws and regulations in connection with its contracts with the federal government. These laws and regulations affect how the Company conducts business with its federal agency customers and may impose added costs on its business. The Company’s failure to comply with federal procurement laws and regulations could cause it to lose business, incur additional costs and subject it to a variety of civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, harm to reputation, suspension of payments, fines, and suspension or debarment from doing business with federal government agencies. As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, the Company’s wholly owned subsidiary, AFSC, conducts business with federal agency customers and federal contractors to such agencies. The Company is investigating, with the assistance of outside counsel, matters relating to compliance by AFSC with Small Business Administration ( “SBA”) regulations and other federal laws applicable to government contractors and has reported findings to the SBA and the Defense Health Agency, including facts indicating violations of SBA regulations and other federal laws, such as the Anti-Kickback Act, by former AFSC executives, none of which was disclosed to Magellan prior to its acquisition of AFSC. Contingencies, if any, arising from the results of this investigation and self-reporting could require us to record balance sheet liabilities or accrue expenses, the amount of which we are not able to currently estimate. While the Company believes that it has responded appropriately by self-reporting findings regarding matters that incepted prior to its acquisition of AFSC in order to mitigate the risk of adverse consequences, should the SBA and/or other federal agencies seek to hold the Company or AFSC responsible for the reported conduct, we may be required to pay damages and/or penalties and AFSC could be suspended or debarred from government contracting. AFSC generated approximately 3% and 2% of the Company’s total net revenues for the year ended December 31, 2017 and three months ended March 31, 2018, respectively. Stock Repurchases On October 26, 2015, the Company’s board of directors approved a stock repurchase plan which authorized the Company to purchase up to $200 million of its outstanding common stock through October 26, 2017 (the “2015 Repurchase Program”). On July 26, 2017, the Company’s board of directors approved an extension of the 2015 Repurchase Program through October 26, 2018. Stock repurchases under the programs may be carried out from time to time in open market transactions (including blocks) or in privately negotiated transactions. The timing of repurchases and the actual amount purchased will depend on a variety of factors including the market price of the Company’s shares, general market and economic conditions, and other corporate considerations. Repurchases may be made pursuant to plans intended to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, which could allow the Company to purchase its shares during periods when it otherwise might be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods. Repurchases are expected to be funded from working capital and anticipated cash from operations. The repurchase authorization does not require the purchase of a specific number of shares and is subject to suspension or termination by the Company’s board of directors at any time. Pursuant to the 2015 Stock Repurchase Program, the Company made purchases as follows (aggregate cost excludes broker commissions and is reflected in millions): Total Number Average of Shares Price Paid Aggregate Period Purchased per Share Cost October 26, 2015 - December 31, 2015 345,044 $ 53.46 $ 18.4 January 1, 2016 - December 31, 2016 1,828,183 58.40 106.8 January 1, 2017 - December 31, 2017 280,140 77.67 21.8 2,453,367 $ 147.0 The Company made no share repurchases from January 1, 2018 through April 20, 2018.

Acquisitions

Acquisitions	3 Months Ended
	Mar. 31, 2018
Acquisitions
Acquisitions	NOTE E—Acquisitions Acquisition of SWH Holdings, Inc. Pursuant to the July 13, 2017 Agreement and Plan of Merger (the “SWH Agreement”), on October 31, 2017 the Company acquired (the “SWH Acquisition”) all of the outstanding equity interests of SWH Holdings, Inc. (“SWH”). SWH is a healthcare company focused on serving complex, high-risk populations, providing Medicare and Medicaid dual-eligible benefits to members in Massachusetts and New York. As consideration for the SWH Acquisition, the Company paid $400.0 million in cash, inclusive of a $10.0 million payment based on SWH’s Medicare plan in Massachusetts receiving a Centers for Medicare & Medicaid Services 2018 Star Rating of at least 4, subject to adjustments as provided in the SWH Agreement. The Company’s estimated fair values of SWH’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. In addition, the amount recognized for deferred tax liabilities may be impacted by the determination of these items. The Company will make appropriate adjustments to the purchase price allocation prior to the completion of the measurement period as required. During the three months ended March 31, 2018, the Company made measurement period adjustments of $6.9 million to increase the goodwill related to the SWH acquisition. The measurement period adjustments were to increase current liabilities. The Company reports the results of operations of SWH in its Healthcare segment . As of March 31, 2018, the Company established a working capital receivable of $0.3 million that was reflected as a reduction to the transaction price.

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2018
Subsequent Events
Subsequent Events	NOTE F—Subsequent Events On July 14, 2017, the State of Florida issued an Invitation to Negotiate for a new contract for its Medicaid managed care program to replace the current contract with the Company and to be effective January 1, 2019. On April 24, 2018 the Company was notified by the AHCA that the Company was not selected to negotiate a new contract to serve as a vendor for its Medicaid managed care program. The Company plans to file a protest with AHCA.

General (Policies)

General (Policies)	3 Months Ended
	Mar. 31, 2018
General.
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. The FASB also issued various ASUs which subsequently amended ASU 2014-09. These amendments and ASU 2014-09, collectively known as Accounting Standard Codification 606 (“ASC 606”), are effective for annual and interim reporting periods of public entities beginning after December 15, 2017. The Company adopted ASC 606 on a modified retrospective basis on January 1, 2018. The Company applied the standard to contracts not completed at the date of initial application. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. For contracts that were modified before January 1, 2018 the Company has not retrospectively restated the contracts for those modifications in accordance with the contract modification guidance, instead the Company reflected the aggregate effect of those modifications when identifying the satisfied and unsatisfied performance obligations, determining the transaction price and allocating the transaction price to the satisfied and unsatisfied performance obligation. Given the nature of our arrangements, the Company does not believe the use of this practical expedient had a significant impact on the results of our adoption. A majority of our managed care revenue continues to be recognized over the applicable coverage period on a per member basis for covered members. In addition a majority of the PBM revenue continues to be recognized as the claims are adjudicated or when the drugs are dispensed. The main impacts of ASC 606 to the Company’s business relate to the timing of revenue recognition in relation to upfront fees in certain PBA contracts, as well as performance incentive, performance guarantee and risk share arrangements. Some of the Company’s PBA contracts contain upfront fees, which under ASC 605 were amortized over the life of the contract. Under ASC 606, these upfront fees constitute a material right and are amortized over the anticipated life of the customer. Certain contracts include performance incentive, performance guarantee and risk share arrangements, which under ASC 605 were recorded based on calculations using the current period’s data. Under ASC 606, the revenues are recognized on a probability weighted approach based on anticipated outcomes for the performance period. In addition, under ASC 606 the accounting for material rights in relation to some of the Company’s government contracts will impact the consolidated balance sheets for interim reporting periods. The cumulative effect of changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASU 2014-09 were as follows (in thousands): Balance at December 31, 2017 Adjustments Due to ASC 606 Balance at January 1, 2018 Assets Other current assets $ 72,323 $ (667) $ 71,656 Total Current Assets 1,483,353 (667) 1,482,686 Deferred income taxes 813 1,335 2,148 Other long-term assets 22,567 (1,333) 21,234 Total Assets 2,957,234 (665) 2,956,569 Liabilities and Stockholders' Equity Accrued liabilities 193,635 (2,182) 191,453 Total Current Liabilities 892,303 (2,182) 890,121 Deferred credits and other long-term liabilities 19,100 5,744 24,844 Total Liabilities 1,680,740 3,562 1,684,302 Retained earnings 1,399,495 (4,227) 1,395,268 Total Stockholders' Equity 1,276,494 (4,227) 1,272,267 Total Liabilities and Stockholders' Equity 2,957,234 (665) 2,956,569 The impact of the adoption of ASC 606 on our consolidated balance sheet as of March 31, 2018 was as follows (in thousands): As Reported Adjustments Balance Without ASC 606 Adoption Assets Accounts receivable $ 748,060 $ (28,336) $ 719,724 Other current assets 108,872 (297) 108,575 Total Current Assets 1,618,846 (28,633) 1,590,213 Other long-term assets 21,489 9,483 30,972 Total Assets 3,091,737 (19,150) 3,072,587 Liabilities and Stockholders' Equity Accrued liabilities 246,909 (21,154) 225,755 Total Current Liabilities 985,701 (21,154) 964,547 Deferred credits and other long-term liabilities 36,148 (6,289) 29,859 Total Liabilities 1,786,608 (27,443) 1,759,165 Retained earnings 1,406,720 8,293 1,415,013 Total Stockholders' Equity 1,305,129 8,293 1,313,422 Total Liabilities and Stockholders' Equity 3,091,737 (19,150) 3,072,587 The impact of the adoption of ASC 606 on our consolidated income statement for the three months ended March 31, 2018 was as follows (in thousands): As Reported Adjustments Balance Without ASC 606 Adoption Managed care and other $ 1,219,763 $ (2,755) $ 1,217,008 PBM 585,314 6,450 591,764 Total net revenue 1,805,077 3,695 1,808,772 Income before income taxes 11,377 3,695 15,072 (Benefit) provision for income taxes (75) 964 889 Net income 11,452 2,731 14,183 Net income attributable to Magellan 11,452 2,731 14,183 In February 2016, the FASB issued ASU No. 2016‑02, “Leases” (“ASU 2016‑02”). This ASU amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets. This guidance is effective for annual and interim reporting periods of public entities beginning after December 15, 2018, with early adoption permitted. The Company is currently assessing the impact of adoption, but believes the effect of this ASU will have a material effect on the Company’s consolidated balance sheets. 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 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). This ASU amends the accounting on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. This guidance is effective for annual and interim periods of public entities beginning after December 15, 2019, with early adoption permitted for fiscal years beginning after December 31, 2018. The Company is currently assessing the potential impact this ASU will have on the Company’s consolidated results of operation, financial position and cash flows. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). This ASU makes eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. This guidance is effective for annual and interim periods of public entities beginning after December 15, 2017 and was adopted by the Company in the quarter ended March 31, 2018. The effect of this guidance was immaterial to the Company’s consolidated results of operations, financial position and cash flows. In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory” (“ASU 2016-16”). The amendments in this ASU require that entities recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This guidance is effective for annual and interim periods of public entities beginning after December 15, 2017 and was adopted by the Company in the quarter ended March 31, 2018. The effect of this guidance was immaterial to the Company’s consolidated results of operations, financial position and cash flows. In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2017-01”). The amendments in this ASU clarify whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance is effective for annual and interim periods of public entities beginning after December 15, 2017 and was adopted by the Company in the quarter ended March 31, 2018. The effect of this guidance was immaterial to the Company’s consolidated results of operations, financial position and cash flows. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). The amendments in this ASU eliminate the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. This guidance is effective for annual and interim periods of public entities beginning after December 15, 2019, with early adoption permitted. The Company is currently assessing the potential impact this ASU will have on the Company’s consolidated results of operations, financial position and cash flows. In May 2017, the FASB issued ASU No. 2017-09, “Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting” (“ASU 2017-09”). The amendments in this ASU include guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. This guidance is effective for annual and interim periods of public entities beginning after December 15, 2017 and was adopted by the Company in the quarter ended March 31, 2018. The effect of this guidance was immaterial to the Company’s consolidated results of operations, financial position and cash flows.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates of the Company 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. In addition, the Company makes significant estimates in relation to revenue recognition under ASC 606 which are explained in more detail in “ Revenue Recognition ” below. Actual results could differ from those estimates.
Revenue Recognition	Revenue Recognition Virtually all of the Company’s revenues are derived from business in North America. The following table disaggregates our revenue by major service line, type of customer and timing of revenue recognition (in thousands): Three months ended March 31, 2018 Healthcare Pharmacy Management Elimination Total Major Service Lines Commercial Risk-based, non-EAP $ 234,391 $ — $ — $ 234,391 EAP risk-based 12,421 — — 12,421 ASO 52,569 7,300 (145) 59,724 Government Risk-based, non-EAP 752,490 — — 752,490 EAP risk-based 82,237 — — 82,237 ASO 23,493 — — 23,493 PBM, including dispensing — 533,792 (46,884) 486,908 Medicare Part D — 98,406 — 98,406 PBA — 33,546 — 33,546 Formulary management — 20,377 — 20,377 Other — 1,084 — 1,084 Total net revenue $ 1,157,601 $ 694,505 $ (47,029) $ 1,805,077 Type of Customer Government $ 858,220 $ 228,049 $ — $ 1,086,269 Non-government 299,381 466,456 (47,029) 718,808 Total net revenue $ 1,157,601 $ 694,505 $ (47,029) $ 1,805,077 Timing of Revenue Recognition Transferred at a point in time $ — $ 632,198 $ (46,884) $ 585,314 Transferred over time 1,157,601 62,307 (145) 1,219,763 Total net revenue $ 1,157,601 $ 694,505 $ (47,029) $ 1,805,077 Per Member Per Month (“PMPM”) Revenue. Almost all of the Healthcare revenue and a small portion of the Pharmacy Management revenue is paid on a PMPM basis. PMPM revenue is inclusive of revenue from the Company’s risk, EAP and ASO contracts and primarily relates to managed care contracts for services such as the provision of behavioral healthcare, specialty healthcare, pharmacy management, or fully integrated healthcare services. PMPM contracts generally have a term of one year or longer, with the exception of government contracts where the customer can terminate with as little as 30 days’ notice for no significant penalty. All managed care contracts have a single performance obligation that constitutes a series for the provision of managed healthcare services for a population of enrolled members for the duration of the contract. The transaction price for PMPM contracts is entirely variable as it primarily includes per member per month fees associated with unspecified membership that fluctuates throughout the contract. In certain contracts, PMPM fees also include adjustments for things such as performance incentives, performance guarantees and risk shares. The Company generally estimates the transaction price using an expected value methodology and amounts are only included in the net transaction price to the extent that it is probable that a significant reversal of cumulative revenue will not occur once any uncertainty is resolved. The majority of the Company’s net PMPM transaction price relates specifically to its efforts to transfer the service for a distinct increment of the series (e.g. day or month) and is recognized as revenue in the month in which members are entitled to service. The remaining transaction price is recognized over the contract period (or portion of the series to which it specifically relates) based upon estimated membership as a measure of progress. Pharmacy Benefit Management Revenue. The Company’s customers for PBM business, including pharmaceutical dispensing operations, are generally comprised of MCOs, employer groups and health plans. PBM relationships generally have an expected term of one year or longer. A master services arrangement (“MSA”) is executed by the Company and the customer, which outlines the terms and conditions of the PBM services to be provided. When a member in the customer’s organization submits a prescription, a claim is created which is presented for approval. The acceptance of each individual claim creates enforceable rights and obligations for each party and represents a separate contract. For each individual claim, the performance obligations are limited to the processing and adjudication of the claim, or dispensing of the products purchased. Generally, the transaction price for PBM services is explicitly listed in each contract and does not represent variable consideration. The Company recognizes PBM revenue, which consists of a negotiated prescription price (ingredient cost plus dispensing fee), co‑payments and any associated administrative fees, when claims are adjudicated or the drugs are shipped. The Company recognizes PBM revenue on a gross basis (i.e. including drug costs and co‑payments) as it is acting as the principal in the arrangement, controls the underlying service, and is contractually obligated to its clients and network pharmacies, which is a primary indicator of gross reporting. In addition, the Company is solely responsible for the claims adjudication process, negotiating the prescription price for the pharmacy, collection of payments from the client for drugs dispensed by the pharmacy, and managing the total prescription drug relationship with the client’s members. If the Company enters into a contract where it is only an administrator, and does not assume any of the risks previously noted, revenue will be recognized on a net basis. For dispensing, at the time of shipment, the earnings process is complete; the obligation of the Company’s customer to pay for the specialty pharmaceutical drugs is fixed, and, due to the nature of the product, the member may neither return the specialty pharmaceutical drugs nor receive a refund. Medicare Part D. The Company is contracted with the Centers for Medicare and Medicaid (“CMS”) as a Prescription Drug Plan (“PDP”) to provide prescription drug benefits to Medicare beneficiaries. The accounting for Medicare Part D revenue is primarily the same as that for PBM, as previously discussed. However, there is certain variable consideration present only in Medicare Part D arrangements. The Company estimates the annual amount of variable consideration using a most likely amount methodology, which is allocated to each reporting period based upon actual utilization as a percentage of estimated utilization for the year. Amounts estimated throughout the year for interim reporting are substantially resolved and fixed as of December 31 st , the end of the plan year. Pharmacy Benefit Administration Revenue. The Company provides Medicaid pharmacy services to states and other government sponsored programs. PBA contracts are generally multi-year arrangements but include language regarding early termination for convenience without material penalty provisions that results in enforceable rights and obligations on a month-to-month basis. In PBA arrangements, the Company is generally paid a fixed fee per month to provide PBA services. In addition, some PBA contracts contain upfront fees that constitute a material right. For contracts without an upfront fee, there is a single performance obligation to stand ready to provide the PBA services required for the contracted period. The Company believes that the customer receives the PBA benefits each day from access to the claims processing activities, and has concluded that a time based measure is appropriate for recognizing PBA revenue. For contracts with an upfront fee, the material right represents an additional performance obligation. Amounts allocated to the material right are initially recorded as a contract liability and recognized as revenue over the anticipated period of benefit of the material right, which generally ranges from 2 to 10 years. Formulary Management Revenue. The Company administers formulary management programs for certain clients through which the Company coordinates the achievement, calculation and collection of rebates and administrative fees from pharmaceutical manufacturers on behalf of clients. Formulary management contracts generally have a term of one year or longer. All formulary management contracts have a single performance obligation that constitutes a series for the provision of rebate services for a drug, with utilization measured and settled on a quarterly basis, for the duration of the arrangement. The Company retains its administrative fee and/or a percentage of rebates that is included in its contract with the client from collecting the rebate from the manufacturer. While the administrative fee and/or the percentage of rebates retained is fixed, there is an unknown quantity of pharmaceutical purchases (utilization) during each quarter, therefore the transaction price itself is variable. The Company uses the expected value methodology to estimate the total rebates earned each quarter based on estimated volumes of pharmaceutical purchases by the Company’s clients during the quarter, as well as historical and/or anticipated retained rebate percentages. The Company does not record as rebate revenue any rebates that are passed through to its clients. In relation to the Company’s PBM business, the Company administers rebate programs through which it receives rebates from pharmaceutical manufacturers that are shared with its customers. The Company recognizes rebates when the Company is entitled to them and when the amounts of the rebates are determinable. The amount recorded for rebates earned by the Company from the pharmaceutical manufacturers is recorded as a reduction of cost of goods sold. Government EAP Risk Based Revenue. The Company has certain contracts with federal customers for the provision of various managed care services, which are classified as government EAP risk based business. These contracts are generally multi-year arrangements. The Company’s federal contracts are reimbursed on either a fixed fee basis or a cost reimbursement basis. The performance obligation on a fixed fee contract is to stand ready to provide the staffing required for the contracted period. For fixed fee contracts, the Company believes the invoiced amount corresponds directly with the value to the customer of the Company’s performance completed to date, therefore the Company is utilizing the “right to invoice” practical expedient, with revenue recognition in the amount for which the Company has the right to invoice. The performance obligation on a cost reimbursement contract is to stand ready to provide the activity or services purchased by the customer, such as the operation of a counseling services group or call center. The performance obligation represents a series for the duration of the arrangement. The reimbursement rate is fixed per the contract, however the level of activity (e.g., number of hours, number of counselors or number of units) is variable. A majority of the Company’s cost reimbursement transaction price relates specifically to its efforts to transfer the service for a distinct increment of the series (e.g. day or month) and is recognized as revenue when the portion of the series for which it relates has been provided (i.e. as the Company provides hours, counselors or units of service). In accordance with ASC 606-10-50-13, the Company is required to include disclosure on its remaining performance obligations as of the end of the current reporting period. Due to the nature of the contracts in the Company’s PBM and Part D business, these reporting requirements are not applicable. The majority of the Company’s remaining contracts meet certain exemptions as defined in ASC 606-10-50-14 through 606-10-50-14A, including (i) performance obligation is part of a contract that has an original expected duration of one year or less; (ii) the right to invoice practical expedient; and (iii) variable consideration related to unsatisfied performance obligations that is allocated entirely to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation, and the terms of that variable consideration relate specifically to our efforts to transfer the distinct service, or to a specific outcome from transferring the distinct service. For the Company’s contracts that pertain to these exemptions: (i) the remaining performance obligations primarily relate to the provision of managed healthcare services to the customers’ membership; (ii) the estimated remaining duration of these performance obligations ranges from the remainder of the current calendar year to three years; and (iii) variable consideration for these contracts primarily includes net per member per month fees associated with unspecified membership that fluctuates throughout the contract. Accounts Receivable, Contract Assets and Contract Liabilities Accounts receivable, contract assets and contract liabilities consisted of the following (in thousands, except percentages): January 1, 2018 March 31, 2018 $ Change % Change Accounts receivable $ 679,269 $ 778,556 $ 99,287 Contract assets 8,564 5,519 (3,045) Contract liabilities - current 14,299 79,251 64,952 Contract liabilities - long-term 12,303 13,192 889 Accounts receivable, which are included in accounts receivable, other current assets and other long-term assets on the consolidated balance sheets, increased by $99.3 million, mainly due to timing. Contract assets, which are included in other current assets on the consolidated balance sheets, decreased by $3.0 million, mainly due to items that became fully earned during the period and shifted to accounts receivable, partially offset by the timing of accrual of certain performance incentives. Contract liabilities – current, which are included in accrued liabilities on the consolidated balance sheets, increased by $65.0 million, mainly due to the timing of receipts related to April 2018 revenues and the timing of material rights generated for some of the Company’s government contracts. Contract liabilities – long-term, which are included in deferred credits and other long-term liabilities on the consolidated balance sheets, increased by $0.9 million, mainly due to receipts for which recognition will be long-term. The Company’s accounts receivable consists of amounts due from customers throughout the United States. Collateral is generally not required. A majority of the Company’s contracts have payment terms in the month of service, or within a few months thereafter. The timing of payments from customers from time to time generate contract assets or contract liabilities, however these amounts are immaterial. Significant Customers Customers exceeding ten percent of the consolidated Company’s net revenues The Company has a contract with the State of Florida to provide integrated healthcare services to Medicaid enrollees in the state of Florida (the “Florida Contract”). The Florida 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 Contract with cause, as defined, upon 24 hour notice and upon 30 days notice for any reason or no reason at all. The Florida Contract generated net revenues of $145.7 million and $152.4 million for the three months ended March 31, 2017 and 2018, respectively. On July 14, 2017, the State of Florida issued an Invitation to Negotiate for a new contract for its Medicaid managed care program to replace the current contract with the Company and to be effective January 1, 2019. On April 24, 2018 the Company was notified by the Florida Agency for Health Care Administration (“AHCA”) that the Company was not selected to negotiate a new contract to serve as a vendor for its Medicaid managed care program. The Company plans to file a protest with AHCA. Customers exceeding ten percent of segment net revenues In addition to the Florida Contract, previously discussed, the following customers generated in excess of ten percent of net revenues for the respective segment for the three months ended March 31, 2017 and 2018 (in thousands): Segment Term Date 2017 2018 Healthcare Customer A (1) $ 37,374 $ 180,457 Customer B December 31, 2018 to December 31, 2020 (2) — 163,733 Customer C December 31, 2022 — 117,254 Pharmacy Management Customer D March 31, 2019 92,712 91,442 (1) The Company, along with other participating managed care plans in this state, continues to provide services while a new contract is being finalized . (2) 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, with members under its contract with CMS and with various agencies and departments of the United States federal government. Net revenues from the Pennsylvania Counties in the aggregate totaled $109.9 million and $136.9 million for the three months ended March 31, 2017 and 2018, respectively. Net revenues from members in relation to its contract with CMS in aggregate totaled $111.6 million and $98.4 million for the three months ended March 31, 2017 and 2018, respectively. As of December 31, 2017 and March 31, 2018, the Company had $131.5 million and $118.3 million, respectively, in net receivables associated with Medicare Part D from CMS and other parties related to this business. Net revenues from contracts with various agencies and departments of the United States federal government in aggregate totaled $88.0 million and $84.6 million for the three months ended March 31, 2017 and 2018, respectively. The Company’s contracts with customers typically have stated terms of one to three years, and in certain cases contain renewal provisions (at the customer’s option) for successive terms of between one and two years (unless terminated earlier). Substantially all of these contracts may be immediately terminated with cause and many of the Company’s contracts are terminable without cause by the customer or the Company either upon the giving of requisite notice and the passage of a specified period of time (typically between 30 and 180 days) or upon the occurrence of other specified 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, 2017 and March 31, 2018 (in thousands): December 31, 2017 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ — $ 284,064 $ — $ 284,064 Investments: U.S. Government and agency securities 28,231 — — 28,231 Obligations of government-sponsored enterprises (2) — 22,088 — 22,088 Corporate debt securities — 269,788 — 269,788 Taxable municipal bonds — 5,000 — 5,000 Certificates of deposit — 2,758 — 2,758 Total assets held at fair value $ 28,231 $ 583,698 $ — $ 611,929 Liabilities Contingent consideration $ — $ — $ 8,817 $ 8,817 Total liabilities held at fair value $ — $ — $ 8,817 $ 8,817 March 31, 2018 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (3) $ — $ 229,405 $ — $ 229,405 Investments: U.S. Government and agency securities 33,170 — — 33,170 Obligations of government-sponsored enterprises (2) — 22,109 — 22,109 Corporate debt securities — 292,480 — 292,480 Certificates of deposit — 2,762 — 2,762 Total assets held at fair value $ 33,170 $ 546,756 $ — $ 579,926 Liabilities Contingent consideration $ — $ — $ 9,050 $ 9,050 Total liabilities held at fair value $ — $ — $ 9,050 $ 9,050 (1) Excludes $114.7 million of cash held in bank accounts by the Company. (2) Includes investments in notes issued by the Federal Home Loan Bank, Federal Farm Credit Banks and Federal National Mortgage Association. (3) Excludes $164.9 million of cash held in bank accounts by the Company. For the three months ended March 31, 2018, the Company has not transferred any assets between fair value measurement levels. The carrying values of financial instruments, including accounts receivable, accounts payable and revolving loan borrowings, approximate their fair values due to their short-term maturities. The fair value of the Notes (as defined below) of $399.0 million as of March 31, 2018 was determined based on quoted market prices and would be classified within Level 1 of the fair value hierarchy. The estimated fair value of the Company’s term loan of $341.2 million as of March 31, 2018 was based on current interest rates for similar types of borrowings and is in Level 2 of the fair value hierarchy. The estimated fair values may not represent actual values of the financial instruments that could be realized as of the balance sheet date or that will be realized in the future. All of the Company’s investments are classified as “available-for-sale” and are carried at fair value. As of the balance sheet date, the fair value of contingent consideration is determined based on probabilities of payment, projected payment dates, discount rates, projected operating income, member engagement and new contract execution. The Company used a probability weighted discounted cash flow method to arrive at the fair value of the contingent consideration. As the fair value measurement for the contingent consideration is based on inputs not observed in the market, these measurements are classified as Level 3 measurements as defined by fair value measurement guidance. The unobservable inputs used in the fair value measurement include the discount rate, probabilities of payment and projected payment dates. As of December 31, 2017 and March 31, 2018, the Company estimated undiscounted future contingent payments of $9.9 million and $9.9 million, respectively. As of March 31, 2018, the aggregate amounts and projected dates of future potential contingent consideration payments were $7.2 million in 2018 and $2.7 million in 2020. As of December 31, 2017, the fair value of the short-term and long-term contingent consideration was $6.9 million and $1.9 million, respectively, and is included in short-term contingent consideration and long-term contingent consideration, respectively, in the consolidated balance sheets. As of March 31, 2018, the fair value of the short-term and long-term contingent consideration was $6.9 million and $2.2 million, respectively, and is included in short-term contingent consideration and long-term contingent consideration, respectively, in the consolidated balance sheets. The change in the fair value of the contingent consideration was $(0.1) million and $0.2 million for the three months ended March 31, 2017 and 2018, respectively, which were recorded as direct service costs and other operating expenses in the consolidated statements of income. The increases during 2018 were mainly a result of changes in present value. The following table summarizes the Company’s liability for contingent consideration for the three months ended March 31, 2018 (in thousands): March 31, 2018 Balance as of beginning of period $ 8,817 Changes in fair value 233 Payments — Balance as of end of period $ 9,050
Cash and Cash Equivalents	Cash and Cash Equivalents Cash equivalents are short-term, highly liquid interest-bearing investments with maturity dates of three months or less when purchased, consisting primarily of money market instruments. At March 31, 2018, the Company’s excess capital and undistributed earnings for the Company’s regulated subsidiaries of $91.5 million are included in cash and cash equivalents.
Investments	Investments If a debt security is in an unrealized loss position and the Company has the intent to sell the debt security, or it is more likely than not that the Company will have to sell the debt security before recovery of its amortized cost basis, the decline in value is deemed to be other‑than‑temporary and is recorded to other‑than‑temporary impairment losses recognized in income in the consolidated statements of 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, 2017 and March 31, 2018, there were no material unrealized losses that the Company determined to be other‑than‑temporary. No realized gains or losses were recorded for the three months ended March 31, 2017 or 2018. The following is a summary of short‑term and long‑term investments at December 31, 2017 and March 31, 2018 (in thousands): December 31, 2017 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value U.S. Government and agency securities $ 28,313 $ — $ (82) $ 28,231 Obligations of government-sponsored enterprises (1) 22,139 — (51) 22,088 Corporate debt securities 270,154 1 (367) 269,788 Taxable municipal bonds 5,000 — — 5,000 Certificates of deposit 2,758 — — 2,758 Total investments at December 31, 2017 $ 328,364 $ 1 $ (500) $ 327,865 March 31, 2018 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value U.S. Government and agency securities $ 33,311 $ — $ (141) $ 33,170 Obligations of government-sponsored enterprises (1) 22,163 3 (57) 22,109 Corporate debt securities 293,205 8 (733) 292,480 Certificates of deposit 2,762 — — 2,762 Total investments at March 31, 2018 $ 351,441 $ 11 $ (931) $ 350,521 (1) Includes investments in notes issued by the Federal Home Loan Bank, Federal National Mortgage Association and Federal Farm Credit Banks. The maturity dates of the Company’s investments as of March 31, 2018 are summarized below (in thousands): Amortized Estimated Cost Fair Value 2018 $ 266,700 $ 266,104 2019 84,741 84,417 Total investments at March 31, 2018 $ 351,441 $ 350,521
Income Taxes	Income Taxes The Company’s effective income tax rates were 40.3 percent and (0.7) percent for the three months ended March 31, 2017 and 2018, 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 uncertain tax positions in its provision for income taxes. The effective income tax rate for the three months ended March 31, 2018 is negative (a tax benefit) primarily due to significant tax deductions during the quarter in excess of recognized stock compensation expense. The full tax benefit of those items (which was fully recognized as a discrete item in the current quarter) exceeded income tax expense otherwise recorded on the Company’s income for the three months ended March 31, 2018. The Company files a consolidated federal income tax return with most of its eighty-percent or more controlled subsidiaries. The Company previously filed separate consolidated federal income tax returns for AlphaCare of New York, Inc. (“AlphaCare”) and its parent, AlphaCare Holdings, Inc. (“AlphaCare Holdings”). During 2017, AlphaCare and AlphaCare Holdings became members of the Magellan federal consolidated group. The Company and its subsidiaries also file income tax returns in various state and local jurisdictions. On January 12, 2018, the Internal Revenue Service (“IRS”) began an examination of the Company’s consolidated federal income tax return for the year ended December 31, 2015. Although the IRS has made no tax assessment, the examination could lead to proposed adjustments to the Company’s tax liability. The Tax Cuts and Jobs Act (the “Tax Act”) was enacted in 2017 and included a number of changes impacting the Company, most notably a reduction of the U.S. corporate income tax rate from 35 percent to 21 percent that was effective January 1, 2018. The legislation also provided for the acceleration of depreciation on certain assets placed in service after September 27, 2017, as well as prospective changes which began in 2018, including additional limitations on the deduction of executive compensation. Staff Accounting Bulletin No. 118 allows registrants to include reasonable estimates as provisional amounts and provides a measurement period by which the accounting must be completed. The measurement period ends when a registrant has obtained, prepared, and analyzed the information that was needed in order to complete the accounting requirements under ASC Topic 740 but under no circumstances is the measurement period to extend beyond one year from the enactment date (i.e. December 22, 2018). The Company did not identify any items for which a reasonable estimate of the income tax effects of the Tax Act could not be determined as of December 31, 2017. The Company included the provisional tax impacts related to the remeasurement of deferred tax assets and liabilities in its consolidated financial statements for the year ended December 31, 2017. No changes were made to those provisional balances in the current quarter. The Company will continue to analyze the Tax Act and additional technical and interpretive guidance on the Tax Act from the government and will complete its accounting no later than December 22, 2018. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Act. Additionally, any changes to the tax basis for temporary differences between the estimates in these statements and the 2017 federal return when filed by the Company will result in a corresponding adjustment to the remeasurement of deferred taxes as of the enactment date of the Tax Act. Any such adjustments will be recorded to tax expense in the quarter of 2018 when the analysis is complete.
Net Operating Loss Carryforwards	Net Operating Loss Carryforwards The Company has $38.8 million of federal net operating loss carryforwards (“NOLs”) available to reduce consolidated taxable income in 2018 and subsequent years. These NOLs (including $37.6 million incurred by AlphaCare prior to its membership in the Magellan consolidated group) will expire in 2018 through 2036 if not used and are subject to examination and adjustment by the IRS. In addition, the Company’s utilization of these NOLs is subject to limitations under the Internal Revenue Code as to the timing and use. At this time, the Company does not believe these limitations will restrict the Company’s ability to use any federal NOLs before they expire. The Company and its subsidiaries also have $93.7 million of NOLs available to reduce state and local taxable income at certain subsidiaries in 2018 and subsequent years. These NOLs will expire in 2018 through 2037 if not used and are subject to examination and adjustment by the respective tax authorities. In addition, the Company’s utilization of certain of these NOLs is subject to limitations as to the timing and use. At this time, the Company does not believe these limitations will restrict the Company’s ability to use any of these state and local NOLs before they expire. Deferred tax assets as of December 31, 2017 and March 31, 2018 are shown net of valuation allowances of $2.4 million. These valuation allowances mostly relate to uncertainties regarding the eventual realization of certain state NOLs. Reversals of valuation allowances are recorded in the period they occur, typically as reductions to income tax expense. Determination of the amount of deferred tax assets considered realizable requires significant judgment and estimation regarding the forecasts of future taxable income which are consistent with the plans and estimates the Company uses to manage the underlying businesses. Although consideration is also given to potential tax planning strategies which might be available to improve the realization of deferred tax assets, none were identified which were both prudent and reasonable. The Company believes taxable income expected to be generated in the future will be sufficient to support realization of the Company’s deferred tax assets, as reduced by valuation allowances. This determination is based upon earnings history and future earnings expectations.
Health Care Reform	Health Care Reform The Patient Protection and the Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “Health Reform Law”), imposes a mandatory annual fee on health insurers for each calendar year beginning on or after January 1, 2014. The Company has obtained rate adjustments from customers which the Company expects will cover the direct costs of these fees and the impact from non‑deductibility of such fees for federal and state income tax purposes. To the extent the Company has such a customer that does not renew, there may be some impact due to taxes paid where the timing and amount of recoupment of these additional costs is uncertain. In the event the Company is unable to obtain rate adjustments to cover the financial impact of the annual fee, the fee may have a material impact on the Company. The Consolidated Appropriations Act of 2016 imposed a one-year moratorium on the Patient Protection and Affordable Care Act health insurer fee (“HIF”), suspending its application for 2017. The HIF fee went back into effect for 2018, however, on January 23, 2018 the United States Congress passed the Continuing Resolution which imposed another one-year moratorium on the HIF fee, suspending its application for 2019. For 2018 the HIF fee is expected to be $30.4 million which is included in accrued liabilities in the consolidated balance sheets.
Stock Compensation	Sto ck Compensation At December 31, 2017 and March 31, 2018, 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, 2017, which was filed with the SEC on March 1, 2018. The Company recorded stock compensation expense of $10.1 million and $7.6 million for the three months ended March 31, 2017 and 2018, respectively. Stock compensation expense recognized in the consolidated statements of income for the three months ended March 31, 2017 and 2018 has been reduced for forfeitures, estimated at between zero and four percent for all periods. The weighted average grant date fair value of all stock options granted during the three months ended March 31, 2018 was $25.79 as estimated using the Black‑Scholes‑Merton option pricing model, which also assumed an expected volatility of 28.21 percent based on the historical volatility of the Company’s stock price. For the three months ended March 31, 2017 and 2018, the benefit of tax deductions in excess of recognized stock compensation expense (net of deficiencies) was $0.9 million and $4.1 million, respectively, which were reported as a reduction to income tax expense. Summarized information related to the Company’s stock options for the three months ended March 31, 2018 is as follows: 2018 Weighted Average Exercise Options Price Outstanding, beginning of period 2,458,237 $ 61.50 Granted 399,706 99.46 Forfeited (8,321) 48.01 Exercised (299,873) 57.14 Outstanding, end of period 2,549,749 $ 67.96 Vested and expected to vest at end of period 2,522,274 $ 59.59 Exercisable, end of period 1,537,926 $ 67.76 All of the Company’s options granted during the three months ended March 31, 2018 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 three months ended March 31, 2018 is as follows: Weighted Average Grant Date Shares Fair Value Outstanding, beginning of period 31,102 $ 68.00 Awarded — — Vested — — Forfeited — — Outstanding, ending of period 31,102 68.00 Summarized information related to the Company’s nonvested restricted stock units (“RSUs”) for the three months ended March 31, 2018 is as follows: Weighted Average Grant Date Shares Fair Value Outstanding, beginning of period 163,289 $ 66.46 Awarded 109,348 99.45 Vested (80,070) 65.41 Forfeited (4,349) 67.60 Outstanding, ending of period 188,218 86.05 The vesting period for RSAs ranges from 12 months to 24 months. In general, RSUs vest ratably on each anniversary over the three years subsequent to grant. Summarized information related to the Company’s nonvested restricted performance stock units (“PSUs”) for the three months ended March 31, 2018 is as follows: 2018 Weighted Average Grant Date Shares Fair Value Outstanding, beginning of period 202,315 $ Awarded 80,502 Vested (33,592) Forfeited (1,469) Outstanding, end of period 247,756 The weighted average estimated fair value of the PSUs granted in the three months ended March 31, 2018 was $141.61, which was derived from a Monte Carlo simulation. Significant assumptions utilized in estimating the value of the awards granted include an expected dividend yield of 0%, a risk free rate of 2.37%, and expected volatility of 20% to 82% (average of 35%). The PSUs granted in the three months ended March 31, 2018, 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, 2020 and vesting on March 5, 2021, the settlement date, provided the grantee remains in the service of the Company on the settlement date. The Company expenses the cost of these awards ratably over the requisite service period. The number of shares for which the PSUs will be settled is calculated as a percentage of the award target and will depend on the Company’s total shareholder return (as defined below), expressed as a percentile ranking of the Company’s total shareholder return as compared to the Company’s peer group (as defined below). The number of shares for which the PSUs will be settled varies from zero to 200 percent of the shares specified in the grant. Total shareholder return is determined by dividing the average share value of the Company’s common stock over the 30 trading days preceding January 1, 2021 by the average share value of the Company’s common stock over the 30 trading days beginning on January 1, 2018, with a deemed reinvestment of any dividends declared during the performance period. The Company’s peer group includes 49 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 Senior Notes On September 22, 2017, the Company completed the public offering of $400.0 million aggregate principal amount of its 4.400% Senior Notes due 2024 (the “Notes”). The Notes are governed by an indenture, dated as of September 22, 2017 (the “Base Indenture”), between the Company, as issuer and U.S. Bank National Association, as trustee, as supplemented by a first supplemental indenture, dated as of September 22, 2017 (the “First Supplemental Indenture” together, with the Base Indenture, the “Indenture”), between the Company, as issuer, and U.S. Bank National Association, as trustee. The Notes were issued at a discount and having a carrying value of $399.3 million as of December 31, 2017 and March 31, 2018. The Notes bear interest payable semiannually in cash in arrears on March 22 and September 22 of each year, commencing on March 22, 2018, which rate is subject to an interest rate adjustment upon the occurrence of certain credit rating events. The Notes mature on September 22, 2024. The Indenture provides that the Notes are redeemable at the Company’s option, in whole or in part, at any time on or after July 22, 2024, at a redemption price equal to 100% of the principal amount of the Notes being redeemed plus accrued and unpaid interest thereon to, but excluding, the redemption date. The Indenture also contains certain covenants which restrict the Company’s ability to, among other things, create liens on its and its subsidiaries’ assets; engage in sale and lease-back transactions; and engage in a consolidation, merger or sale of assets. Credit Agreement On September 22, 2017, the Company entered into a credit agreement with various lenders that provides for a $400.0 million senior unsecured revolving credit facility and a $350.0 million senior unsecured term loan facility to the Company, as the borrower (the “2017 Credit Agreement”). The 2017 Credit Agreement is scheduled to mature on September 22, 2022. Under the 2017 Credit Agreement, the annual interest rate on the loan borrowing is equal to (i) in the case of base rate loans, the sum of an initial borrowing margin of 0.500 percent plus the higher of the prime rate, one-half of one percent in excess of the overnight “federal funds” rate, or the Eurodollar rate for one month plus 1.000 percent, or (ii) in the case of Eurodollar rate loans, the sum of an initial borrowing margin of 1.500 percent plus the Eurodollar rate for the selected interest period. The borrowing margin is subject to adjustment based on the Company’s debt rating as provided by certain rating agencies. The Company has the option to borrow in base rate loans or Eurodollar rate loans at its discretion. The commitment commission on the revolving credit facility under the 2017 Credit Agreement is 0.200 percent of the unused revolving credit commitment, which rate shall be subject to adjustment based on the Company’s debt rating as provided by certain rating agencies. For the three months ended March 31, 2018, the weighted average interest rate was approximately 3.163 percent. As of March 31, 2018, the contractual maturities of the term loan under the 2017 Credit Agreement were as follows: 2018—$13.1 million; 2019—$17.5 million; 2020—$17.5 million; 2021—$17.5 million; and 2022—$275.6 million. Due to the timing of working capital needs, the Company will periodically borrow from the revolving loan under the 2017 Credit Agreement. At December 31, 2017 and March 31, 2018, the Company had revolving loan borrowings of $92.5 million and $42.5 million, respectively. The Company had $17.6 million of letters of credit outstanding at March 31, 2018 under the 2017 Credit Agreement. At March 31, 2018, the Company had a borrowing capacity of $339.9 million under the 2017 Credit Agreement. Included in long-term debt and capital lease obligations are deferred loan and bond issuance costs as of December 31, 2017 and March 31, 2018 of $6.6 million and $6.3 million, respectively. Letter of Credit Agreement On August 22, 2017, the Company entered into a Continuing Agreement for Standby Letters of Credit with The Bank of Tokyo-Mitsubishi UFJ, Ltd. (“BTMU”), as issuer (the “L/C Agreement”), under which BTMU, at its sole discretion, may provide stand-by letter of credit to the Company. The Company had letters of credit outstanding under the L/C Agreement as of December 31, 2017 and March 31, 2018 of $26.5 million and $48.5 million, respectively. Capital Lease Obligations There were $22.9 million and $21.4 million of capital lease obligations at December 31, 2017 and March 31, 2018, respectively. The Company’s capital lease obligations represent amounts due under leases for certain properties, computer software (acquired prior to the prospective adoption of ASU 2015-05 on January 1, 2016) and equipment.

General (Tables)

General (Tables)	3 Months Ended
	Mar. 31, 2018
General
Summary of impacts of adoption of ASC 606	The cumulative effect of changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASU 2014-09 were as follows (in thousands): Balance at December 31, 2017 Adjustments Due to ASC 606 Balance at January 1, 2018 Assets Other current assets $ 72,323 $ (667) $ 71,656 Total Current Assets 1,483,353 (667) 1,482,686 Deferred income taxes 813 1,335 2,148 Other long-term assets 22,567 (1,333) 21,234 Total Assets 2,957,234 (665) 2,956,569 Liabilities and Stockholders' Equity Accrued liabilities 193,635 (2,182) 191,453 Total Current Liabilities 892,303 (2,182) 890,121 Deferred credits and other long-term liabilities 19,100 5,744 24,844 Total Liabilities 1,680,740 3,562 1,684,302 Retained earnings 1,399,495 (4,227) 1,395,268 Total Stockholders' Equity 1,276,494 (4,227) 1,272,267 Total Liabilities and Stockholders' Equity 2,957,234 (665) 2,956,569 The impact of the adoption of ASC 606 on our consolidated balance sheet as of March 31, 2018 was as follows (in thousands): As Reported Adjustments Balance Without ASC 606 Adoption Assets Accounts receivable $ 748,060 $ (28,336) $ 719,724 Other current assets 108,872 (297) 108,575 Total Current Assets 1,618,846 (28,633) 1,590,213 Other long-term assets 21,489 9,483 30,972 Total Assets 3,091,737 (19,150) 3,072,587 Liabilities and Stockholders' Equity Accrued liabilities 246,909 (21,154) 225,755 Total Current Liabilities 985,701 (21,154) 964,547 Deferred credits and other long-term liabilities 36,148 (6,289) 29,859 Total Liabilities 1,786,608 (27,443) 1,759,165 Retained earnings 1,406,720 8,293 1,415,013 Total Stockholders' Equity 1,305,129 8,293 1,313,422 Total Liabilities and Stockholders' Equity 3,091,737 (19,150) 3,072,587 The impact of the adoption of ASC 606 on our consolidated income statement for the three months ended March 31, 2018 was as follows (in thousands): As Reported Adjustments Balance Without ASC 606 Adoption Managed care and other $ 1,219,763 $ (2,755) $ 1,217,008 PBM 585,314 6,450 591,764 Total net revenue 1,805,077 3,695 1,808,772 Income before income taxes 11,377 3,695 15,072 (Benefit) provision for income taxes (75) 964 889 Net income 11,452 2,731 14,183 Net income attributable to Magellan 11,452 2,731 14,183
Schedule of disaggregation of revenue by major service line, type of customer and timing of revenue recognition	Three months ended March 31, 2018 Healthcare Pharmacy Management Elimination Total Major Service Lines Commercial Risk-based, non-EAP $ 234,391 $ — $ — $ 234,391 EAP risk-based 12,421 — — 12,421 ASO 52,569 7,300 (145) 59,724 Government Risk-based, non-EAP 752,490 — — 752,490 EAP risk-based 82,237 — — 82,237 ASO 23,493 — — 23,493 PBM, including dispensing — 533,792 (46,884) 486,908 Medicare Part D — 98,406 — 98,406 PBA — 33,546 — 33,546 Formulary management — 20,377 — 20,377 Other — 1,084 — 1,084 Total net revenue $ 1,157,601 $ 694,505 $ (47,029) $ 1,805,077 Type of Customer Government $ 858,220 $ 228,049 $ — $ 1,086,269 Non-government 299,381 466,456 (47,029) 718,808 Total net revenue $ 1,157,601 $ 694,505 $ (47,029) $ 1,805,077 Timing of Revenue Recognition Transferred at a point in time $ — $ 632,198 $ (46,884) $ 585,314 Transferred over time 1,157,601 62,307 (145) 1,219,763 Total net revenue $ 1,157,601 $ 694,505 $ (47,029) $ 1,805,077
Schedule of accounts receivable, contract assets and contract liabilities	January 1, 2018 March 31, 2018 $ Change % Change Accounts receivable $ 679,269 $ 778,556 $ 99,287 Contract assets 8,564 5,519 (3,045) Contract liabilities - current 14,299 79,251 64,952 Contract liabilities - long-term 12,303 13,192 889
Schedule of customers generating in excess of ten percent of net revenues for respective segment	Segment Term Date 2017 2018 Healthcare Customer A (1) $ 37,374 $ 180,457 Customer B December 31, 2018 to December 31, 2020 (2) — 163,733 Customer C December 31, 2022 — 117,254 Pharmacy Management Customer D March 31, 2019 92,712 91,442 (1) The Company, along with other participating managed care plans in this state, continues to provide services while a new contract is being finalized . (2) 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, 2017 and March 31, 2018 (in thousands): December 31, 2017 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ — $ 284,064 $ — $ 284,064 Investments: U.S. Government and agency securities 28,231 — — 28,231 Obligations of government-sponsored enterprises (2) — 22,088 — 22,088 Corporate debt securities — 269,788 — 269,788 Taxable municipal bonds — 5,000 — 5,000 Certificates of deposit — 2,758 — 2,758 Total assets held at fair value $ 28,231 $ 583,698 $ — $ 611,929 Liabilities Contingent consideration $ — $ — $ 8,817 $ 8,817 Total liabilities held at fair value $ — $ — $ 8,817 $ 8,817 March 31, 2018 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (3) $ — $ 229,405 $ — $ 229,405 Investments: U.S. Government and agency securities 33,170 — — 33,170 Obligations of government-sponsored enterprises (2) — 22,109 — 22,109 Corporate debt securities — 292,480 — 292,480 Certificates of deposit — 2,762 — 2,762 Total assets held at fair value $ 33,170 $ 546,756 $ — $ 579,926 Liabilities Contingent consideration $ — $ — $ 9,050 $ 9,050 Total liabilities held at fair value $ — $ — $ 9,050 $ 9,050 (1) Excludes $114.7 million of cash held in bank accounts by the Company. (2) Includes investments in notes issued by the Federal Home Loan Bank, Federal Farm Credit Banks and Federal National Mortgage Association. (3) Excludes $164.9 million of 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 for the three months ended March 31, 2018 (in thousands): March 31, 2018 Balance as of beginning of period $ 8,817 Changes in fair value 233 Payments — Balance as of end of period $ 9,050
Summary of short-term and long-term investments	The following is a summary of short‑term and long‑term investments at December 31, 2017 and March 31, 2018 (in thousands): December 31, 2017 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value U.S. Government and agency securities $ 28,313 $ — $ (82) $ 28,231 Obligations of government-sponsored enterprises (1) 22,139 — (51) 22,088 Corporate debt securities 270,154 1 (367) 269,788 Taxable municipal bonds 5,000 — — 5,000 Certificates of deposit 2,758 — — 2,758 Total investments at December 31, 2017 $ 328,364 $ 1 $ (500) $ 327,865 March 31, 2018 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value U.S. Government and agency securities $ 33,311 $ — $ (141) $ 33,170 Obligations of government-sponsored enterprises (1) 22,163 3 (57) 22,109 Corporate debt securities 293,205 8 (733) 292,480 Certificates of deposit 2,762 — — 2,762 Total investments at March 31, 2018 $ 351,441 $ 11 $ (931) $ 350,521 (1) Includes investments in notes issued by the Federal Home Loan Bank, Federal National Mortgage Association and Federal Farm Credit Banks.
Summary of maturity dates of investments	The maturity dates of the Company’s investments as of March 31, 2018 are summarized below (in thousands): Amortized Estimated Cost Fair Value 2018 $ 266,700 $ 266,104 2019 84,741 84,417 Total investments at March 31, 2018 $ 351,441 $ 350,521
Schedule of stock option activity	Summarized information related to the Company’s stock options for the three months ended March 31, 2018 is as follows: 2018 Weighted Average Exercise Options Price Outstanding, beginning of period 2,458,237 $ 61.50 Granted 399,706 99.46 Forfeited (8,321) 48.01 Exercised (299,873) 57.14 Outstanding, end of period 2,549,749 $ 67.96 Vested and expected to vest at end of period 2,522,274 $ 59.59 Exercisable, end of period 1,537,926 $ 67.76
Schedule of nonvested restricted stock award activity	Summarized information related to the Company’s nonvested restricted stock awards (“RSAs”) for the three months ended March 31, 2018 is as follows: Weighted Average Grant Date Shares Fair Value Outstanding, beginning of period 31,102 $ 68.00 Awarded — — Vested — — Forfeited — — Outstanding, ending of period 31,102 68.00
Schedule of nonvested restricted stock units	Summarized information related to the Company’s nonvested restricted stock units (“RSUs”) for the three months ended March 31, 2018 is as follows: Weighted Average Grant Date Shares Fair Value Outstanding, beginning of period 163,289 $ 66.46 Awarded 109,348 99.45 Vested (80,070) 65.41 Forfeited (4,349) 67.60 Outstanding, ending of period 188,218 86.05
Schedule of nonvested restricted performance stock units	Summarized information related to the Company’s nonvested restricted performance stock units (“PSUs”) for the three months ended March 31, 2018 is as follows: 2018 Weighted Average Grant Date Shares Fair Value Outstanding, beginning of period 202,315 $ Awarded 80,502 Vested (33,592) Forfeited (1,469) Outstanding, end of period 247,756

Net Income per Common Share A17

Net Income per Common Share Attributable to Magellan Health, Inc. (Tables)	3 Months Ended
	Mar. 31, 2018
Net Income per Common Share Attributable to Magellan Health, Inc.
Schedule of computation of basic and diluted earnings per share	The following table reconciles income attributable to common shareholders (numerator) and shares (denominator) used in the computations of net income per share attributable to common shareholders (in thousands, except per share data) for the three months ended March 31: 2017 2018 Numerator: Net income attributable to Magellan $ 17,747 $ 11,452 Denominator: Weighted average number of common shares outstanding—basic 23,012 24,349 Common stock equivalents—stock options 474 806 Common stock equivalents—RSAs 402 24 Common stock equivalents—RSUs 81 77 Common stock equivalents—PSUs 66 353 Common stock equivalents—employee stock purchase plan 3 3 Weighted average number of common shares outstanding—diluted 24,038 25,612 Net income attributable to Magellan per common share—basic $ 0.77 $ 0.47 Net income attributable to Magellan per common share—diluted $ 0.74 $ 0.45

Business Segment Information (T

Business Segment Information (Tables)	3 Months Ended
	Mar. 31, 2018
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): Corporate Pharmacy and Healthcare Management Elimination Consolidated Three Months Ended March 31, 2017 Managed care and other revenue $ 665,376 $ 64,180 $ (216) $ 729,340 PBM revenue — 606,746 (30,463) 576,283 Cost of care (482,054) — — (482,054) Cost of goods sold — (571,837) 29,204 (542,633) Direct service costs and other (138,968) (75,853) (6,665) (221,486) Stock compensation expense (1) 2,659 5,730 1,751 10,140 Changes in fair value of contingent consideration (1) (49) — — (49) Less: non-controlling interest segment loss (2) (277) — (1) (278) Segment profit (loss) $ 47,241 $ 28,966 $ (6,388) $ 69,819 Corporate Pharmacy and Healthcare Management Elimination Consolidated Three Months Ended March 31, 2018 Managed care and other revenue $ 1,157,601 $ 62,307 $ (145) $ 1,219,763 PBM revenue — 632,198 (46,884) 585,314 Cost of care (928,661) — — (928,661) Cost of goods sold — (604,913) 45,248 (559,665) Direct service costs and other (186,246) (75,586) (7,245) (269,077) Stock compensation expense (1) 2,950 1,485 3,211 7,646 Changes in fair value of contingent consideration (1) 233 — — 233 Segment profit (loss) $ 45,877 $ 15,491 $ (5,815) $ 55,553 (1) Stock compensation expense, changes in the fair value of contingent consideration recorded in relation to acquisitions and impairment of intangible assets are included in direct service costs and other operating expenses; however, these amounts are excluded from the computation of Segment Profit. (2) The non‑controlling portion of AlphaCare’s segment loss is excluded from the computation of Segment Profit.
Schedule of reconciliation of Segment Profit to income before income taxes	The following table reconciles income before income taxes to Segment Profit (in thousands): Three Months Ended March 31, 2017 2018 Income before income taxes $ 29,275 $ 11,377 Stock compensation expense 10,140 7,646 Changes in fair value of contingent consideration (49) 233 Non-controlling interest segment loss 278 — Depreciation and amortization 26,976 30,407 Interest expense 4,148 8,366 Interest and other income (949) (2,476) Segment Profit $ 69,819 $ 55,553

Commitments and Contingencies (

Commitments and Contingencies (Tables)	3 Months Ended
	Mar. 31, 2018
October 2015 Share Repurchase Program
Schedule of stock repurchases made	Pursuant to the 2015 Stock Repurchase Program, the Company made purchases as follows (aggregate cost excludes broker commissions and is reflected in millions): Total Number Average of Shares Price Paid Aggregate Period Purchased per Share Cost October 26, 2015 - December 31, 2015 345,044 $ 53.46 $ 18.4 January 1, 2016 - December 31, 2016 1,828,183 58.40 106.8 January 1, 2017 - December 31, 2017 280,140 77.67 21.8 2,453,367 $ 147.0

General _ Business Overview (De

General – Business Overview (Details)	3 Months Ended
	Mar. 31, 2018segment
Operating results by business segment
Number of segments	3
Healthcare
Operating results by business segment
Number of reporting units	2

General _ Cumulative Effect of

General – Cumulative Effect of Changes for Adoption of ASU 2014-09 (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jan. 01, 2018	Dec. 31, 2017
Assets
Other current assets	$ 108,872	$ 71,656	$ 72,323
Total Current Assets	1,618,846	1,482,686	1,483,353
Deferred income taxes	1,128	2,148	813
Other long-term assets	21,489	21,234	22,567
Total Assets	3,091,737	2,956,569	2,957,234
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued liabilities	246,909	191,453	193,635
Total Current Liabilities	985,701	890,121	892,303
Deferred credits and other long-term liabilities	36,148	24,844	19,100
Total Liabilities	1,786,608	1,684,302	1,680,740
Retained earnings	1,406,720	1,395,268	1,399,495
Total Stockholders' Equity	1,305,129	1,272,267	1,276,494
Total Liabilities and Stockholders' Equity	3,091,737	2,956,569	$ 2,957,234
Adjustments | ASU 2014-09
Assets
Other current assets	(297)	(667)
Total Current Assets	(28,633)	(667)
Deferred income taxes		1,335
Other long-term assets	9,483	(1,333)
Total Assets	(19,150)	(665)
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued liabilities	(21,154)	(2,182)
Total Current Liabilities	(21,154)	(2,182)
Deferred credits and other long-term liabilities	(6,289)	5,744
Total Liabilities	(27,443)	3,562
Retained earnings	8,293	(4,227)
Total Stockholders' Equity	8,293	(4,227)
Total Liabilities and Stockholders' Equity	$ (19,150)	$ (665)

General _ Impact of Adoption of

General – Impact of Adoption of ASC 606 on Consolidated Balance Sheet (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jan. 01, 2018	Dec. 31, 2017
Assets
Accounts receivable	$ 748,060		$ 660,775
Other current assets	108,872	$ 71,656	72,323
Total Current Assets	1,618,846	1,482,686	1,483,353
Other long-term assets	21,489	21,234	22,567
Total Assets	3,091,737	2,956,569	2,957,234
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued liabilities	246,909	191,453	193,635
Total Current Liabilities	985,701	890,121	892,303
Deferred credits and other long-term liabilities	36,148	24,844	19,100
Total Liabilities	1,786,608	1,684,302	1,680,740
Retained earnings	1,406,720	1,395,268	1,399,495
Total Stockholders' Equity	1,305,129	1,272,267	1,276,494
Total Liabilities and Stockholders' Equity	3,091,737	2,956,569	$ 2,957,234
ASU 2014-09 | Adjustments
Assets
Accounts receivable	(28,336)
Other current assets	(297)	(667)
Total Current Assets	(28,633)	(667)
Other long-term assets	9,483	(1,333)
Total Assets	(19,150)	(665)
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued liabilities	(21,154)	(2,182)
Total Current Liabilities	(21,154)	(2,182)
Deferred credits and other long-term liabilities	(6,289)	5,744
Total Liabilities	(27,443)	3,562
Retained earnings	8,293	(4,227)
Total Stockholders' Equity	8,293	(4,227)
Total Liabilities and Stockholders' Equity	(19,150)	$ (665)
ASU 2014-09 | Balance Without ASC 606 Adoption
Assets
Accounts receivable	719,724
Other current assets	108,575
Total Current Assets	1,590,213
Other long-term assets	30,972
Total Assets	3,072,587
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued liabilities	225,755
Total Current Liabilities	964,547
Deferred credits and other long-term liabilities	29,859
Total Liabilities	1,759,165
Retained earnings	1,415,013
Total Stockholders' Equity	1,313,422
Total Liabilities and Stockholders' Equity	$ 3,072,587

General _ Impact of Adoption 23

General – Impact of Adoption of ASC 606 on Consolidated Income Statement (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Operating results by business segment
Net revenue	$ 1,805,077	$ 1,305,623
Income before income taxes	11,377	29,275
Provision (benefit) for income taxes	(75)	11,806
Net income	11,452	17,469
Net income attributable to Magellan	11,452	17,747
Managed care and other
Operating results by business segment
Net revenue	1,219,763	729,340
PBM
Operating results by business segment
Net revenue	585,314	$ 576,283
ASU 2014-09 | Adjustments
Operating results by business segment
Net revenue	3,695
Income before income taxes	3,695
Provision (benefit) for income taxes	964
Net income	2,731
Net income attributable to Magellan	2,731
ASU 2014-09 | Adjustments | Managed care and other
Operating results by business segment
Net revenue	(2,755)
ASU 2014-09 | Adjustments | PBM
Operating results by business segment
Net revenue	6,450
ASU 2014-09 | Balance Without ASC 606 Adoption
Operating results by business segment
Net revenue	1,808,772
Income before income taxes	15,072
Provision (benefit) for income taxes	889
Net income	14,183
Net income attributable to Magellan	14,183
ASU 2014-09 | Balance Without ASC 606 Adoption | Managed care and other
Operating results by business segment
Net revenue	1,217,008
ASU 2014-09 | Balance Without ASC 606 Adoption | PBM
Operating results by business segment
Net revenue	$ 591,764

General _ Revenue Recognition (

General – Revenue Recognition (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018USD ($)
Operating results by business segment
Net revenue	$ 1,805,077
Transferred at a point in time
Operating results by business segment
Net revenue	585,314
Transferred over time
Operating results by business segment
Net revenue	1,219,763
PBM, including dispensing
Operating results by business segment
Net revenue	486,908
Medicare Part D
Operating results by business segment
Net revenue	98,406
PBA
Operating results by business segment
Net revenue	33,546
Formulary management
Operating results by business segment
Net revenue	20,377
Other service lines
Operating results by business segment
Net revenue	1,084
Commercial | Risk-based, non-EAP
Operating results by business segment
Net revenue	234,391
Commercial | EAP risk-based
Operating results by business segment
Net revenue	12,421
Commercial | ASO
Operating results by business segment
Net revenue	59,724
Government
Operating results by business segment
Net revenue	1,086,269
Government | Risk-based, non-EAP
Operating results by business segment
Net revenue	752,490
Government | EAP risk-based
Operating results by business segment
Net revenue	82,237
Government | ASO
Operating results by business segment
Net revenue	23,493
Non-government
Operating results by business segment
Net revenue	718,808
Healthcare
Operating results by business segment
Net revenue	1,157,601
Healthcare | Transferred over time
Operating results by business segment
Net revenue	1,157,601
Healthcare | Commercial | Risk-based, non-EAP
Operating results by business segment
Net revenue	234,391
Healthcare | Commercial | EAP risk-based
Operating results by business segment
Net revenue	12,421
Healthcare | Commercial | ASO
Operating results by business segment
Net revenue	52,569
Healthcare | Government
Operating results by business segment
Net revenue	858,220
Healthcare | Government | Risk-based, non-EAP
Operating results by business segment
Net revenue	752,490
Healthcare | Government | EAP risk-based
Operating results by business segment
Net revenue	82,237
Healthcare | Government | ASO
Operating results by business segment
Net revenue	23,493
Healthcare | Non-government
Operating results by business segment
Net revenue	299,381
Pharmacy Management
Operating results by business segment
Net revenue	694,505
Pharmacy Management | Transferred at a point in time
Operating results by business segment
Net revenue	632,198
Pharmacy Management | Transferred over time
Operating results by business segment
Net revenue	62,307
Pharmacy Management | PBM, including dispensing
Operating results by business segment
Net revenue	533,792
Pharmacy Management | Medicare Part D
Operating results by business segment
Net revenue	98,406
Pharmacy Management | PBA
Operating results by business segment
Net revenue	33,546
Pharmacy Management | Formulary management
Operating results by business segment
Net revenue	20,377
Pharmacy Management | Other service lines
Operating results by business segment
Net revenue	1,084
Pharmacy Management | Commercial | ASO
Operating results by business segment
Net revenue	7,300
Pharmacy Management | Government
Operating results by business segment
Net revenue	228,049
Pharmacy Management | Non-government
Operating results by business segment
Net revenue	466,456
Elimination
Operating results by business segment
Net revenue	(47,029)
Elimination | Transferred at a point in time
Operating results by business segment
Net revenue	(46,884)
Elimination | Transferred over time
Operating results by business segment
Net revenue	(145)
Elimination | PBM, including dispensing
Operating results by business segment
Net revenue	(46,884)
Elimination | Commercial | ASO
Operating results by business segment
Net revenue	(145)
Elimination | Non-government
Operating results by business segment
Net revenue	$ (47,029)

General - Per Member Per Month

General - Per Member Per Month Revenue (Details) - Minimum	3 Months Ended
	Mar. 31, 2018
Operating results by business segment
Term of PMPM contract	1 year
Required notice to terminate PMPM contract	30 days

General - Pharmacy Benefit Mana

General - Pharmacy Benefit Management Revenue (Details)	3 Months Ended
	Mar. 31, 2018
Minimum
Operating results by business segment
Expected term of PBM relationship	1 year

General - Pharmacy Benefit Admi

General - Pharmacy Benefit Administration Revenue (Details)	3 Months Ended
	Mar. 31, 2018
Minimum
Operating results by business segment
Anticipated period of benefit of the material right	2 years
Maximum
Operating results by business segment
Anticipated period of benefit of the material right	10 years

General - Formulary Management

General - Formulary Management Revenue (Details)	3 Months Ended
	Mar. 31, 2018
Minimum
Operating results by business segment
Term of formulary management contract	1 year

General - Accounts Receivable,

General - Accounts Receivable, Contract Assets and Contract Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
General
Accounts receivable	$ 778,556	$ 679,269
Change in accounts receivable (in dollars)	$ 99,287
Change in accounts receivable (as a percent)	14.60%
Contract assets	$ 5,519	8,564
Change in contract assets (in dollars)	$ (3,045)
Change in contract assets (as a percent)	(35.60%)
Contract liabilities - current	$ 79,251	14,299
Change in contract liabilities - current (in dollars)	$ 64,952
Change in contract liabilities - current (as a percent)	454.20%
Contract liabilities - long-term	$ 13,192	$ 12,303
Change in contract liabilities - long-term (in dollars)	$ 889
Change in contract liabilities - long-term (as a percent)	7.20%
Revenue recognized previously included in current contract liabilities	$ 11,300
Estimated revenue to be recognized in 2018	78,500
Estimated revenue to be recognized in 2019	2,800
Estimated revenue to be recognized in 2020	2,600
Estimated revenue to be recognized in 2021 and beyond	$ 8,500

General - Customers Exceeding T

General - Customers Exceeding Ten Percent of Consolidated Net Revenues (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Operating results by business segment
Revenues	$ 1,805,077	$ 1,305,623
Florida Contract
Operating results by business segment
Termination notice	1 day
Termination notice period without cause	30 days
Revenues	$ 152,400	145,700
Healthcare | Customer A
Operating results by business segment
Revenues	180,457	37,374
Healthcare | Customer B
Operating results by business segment
Revenues	163,733
Healthcare | Customer C
Operating results by business segment
Revenues	117,254
Pharmacy Management | Customer D
Operating results by business segment
Revenues	$ 91,442	$ 92,712

General - Concentration of Busi

General - Concentration of Business (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Operating results by business segment
Revenues	$ 1,805,077	$ 1,305,623
Accounts receivable, net	$ 748,060		$ 660,775
Minimum
Operating results by business segment
Term of contracts with customers	1 year
Term of renewal contracts	1 year
Notice period for termination of contract	30 days
Maximum
Operating results by business segment
Term of contracts with customers	3 years
Term of renewal contracts	2 years
Notice period for termination of contract	180 days
Pennsylvania Counties
Operating results by business segment
Revenues	$ 136,900	109,900
CMS
Operating results by business segment
Revenues	98,400	111,600
Accounts receivable, net	118,300		$ 131,500
United States federal government
Operating results by business segment
Revenues	$ 84,600	$ 88,000

General - Fair Value Measuremen

General - Fair Value Measurements (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Assets
Investments	$ 350,521	$ 327,865
Cash held in bank accounts	164,900	114,700
Liabilities
Contingent consideration	9,050	8,817
U.S. Government and agency securities
Assets
Investments	33,170	28,231
Obligations of government-sponsored enterprises
Assets
Investments	22,109	22,088
Corporate debt securities
Assets
Investments	292,480	269,788
Taxable municipal bonds
Assets
Investments		5,000
Certificates of deposit
Assets
Investments	2,762	2,758
Level 1 | 4.400% Senior Notes due 2024
Liabilities
Fair value of debt	399,000
Level 2 | Term Loan
Liabilities
Fair value of debt	341,200
Fair value measured on recurring basis
Assets
Total assets held at fair value	579,926	611,929
Liabilities
Contingent consideration	9,050	8,817
Total liabilities held at fair value	9,050	8,817
Fair value measured on recurring basis | Other than cash held in bank accounts by Company
Assets
Cash and cash equivalents	229,405	284,064
Fair value measured on recurring basis | U.S. Government and agency securities
Assets
Investments	33,170	28,231
Fair value measured on recurring basis | Obligations of government-sponsored enterprises
Assets
Investments	22,109	22,088
Fair value measured on recurring basis | Corporate debt securities
Assets
Investments	292,480	269,788
Fair value measured on recurring basis | Taxable municipal bonds
Assets
Investments		5,000
Fair value measured on recurring basis | Certificates of deposit
Assets
Investments	2,762	2,758
Fair value measured on recurring basis | Level 1
Assets
Total assets held at fair value	33,170	28,231
Fair value measured on recurring basis | Level 1 | U.S. Government and agency securities
Assets
Investments	33,170	28,231
Fair value measured on recurring basis | Level 2
Assets
Total assets held at fair value	546,756	583,698
Fair value measured on recurring basis | Level 2 | Other than cash held in bank accounts by Company
Assets
Cash and cash equivalents	229,405	284,064
Fair value measured on recurring basis | Level 2 | Obligations of government-sponsored enterprises
Assets
Investments	22,109	22,088
Fair value measured on recurring basis | Level 2 | Corporate debt securities
Assets
Investments	292,480	269,788
Fair value measured on recurring basis | Level 2 | Taxable municipal bonds
Assets
Investments		5,000
Fair value measured on recurring basis | Level 2 | Certificates of deposit
Assets
Investments	2,762	2,758
Fair value measured on recurring basis | Level 3
Liabilities
Contingent consideration	9,050	8,817
Total liabilities held at fair value	$ 9,050	$ 8,817

General - Contingent Considerat

General - Contingent Consideration (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2020	Dec. 31, 2018	Dec. 31, 2017
Fair value measurement of contingent consideration
Estimated undiscounted future contingent payments	$ 9,900				$ 9,900
Fair value of short-term contingent consideration	6,892				6,892
Fair value of long-term contingent consideration	2,158				$ 1,925
Liability for contingent consideration
Balance as of beginning of period	8,817
Changes in fair value	233	$ (100)
Balance as of end of period	$ 9,050
Forecast
Fair value measurement of contingent consideration
Estimated undiscounted future contingent payments			$ 2,700	$ 7,200

General - Cash And Cash Equival

General - Cash And Cash Equivalents (Details) $ in Millions	Mar. 31, 2018USD ($)
Cash and Cash Equivalents
Excess capital and undistributed earnings for regulated subsidiaries included in cash and cash equivalents	$ 91.5

General - Investments (Details)

General - Investments (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Short-term and long-term investments
Other-than-temporary unrealized losses	$ 0		$ 0
Realized gains or losses	0	$ 0
Amortized Cost	351,441		328,364
Gross Unrealized Gains	11		1
Gross Unrealized Losses	(931)		(500)
Estimated Fair Value	350,521		327,865
U.S. Government and agency securities
Short-term and long-term investments
Amortized Cost	33,311		28,313
Gross Unrealized Losses	(141)		(82)
Estimated Fair Value	33,170		28,231
Obligations of government-sponsored enterprises
Short-term and long-term investments
Amortized Cost	22,163		22,139
Gross Unrealized Gains	3
Gross Unrealized Losses	(57)		(51)
Estimated Fair Value	22,109		22,088
Corporate debt securities
Short-term and long-term investments
Amortized Cost	293,205		270,154
Gross Unrealized Gains	8		1
Gross Unrealized Losses	(733)		(367)
Estimated Fair Value	292,480		269,788
Taxable municipal bonds
Short-term and long-term investments
Amortized Cost			5,000
Estimated Fair Value			5,000
Certificates of deposit
Short-term and long-term investments
Amortized Cost	2,762		2,758
Estimated Fair Value	$ 2,762		$ 2,758

General - Investments by Maturi

General - Investments by Maturity Date (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Amortized Cost
Investments amortized cost maturity dates 2018	$ 266,700
Investments amortized cost maturity dates 2019	84,741
Amortized Cost	351,441	$ 328,364
Estimated Fair Value
Investments fair value maturity dates 2018	266,104
Investments fair value maturity dates 2019	84,417
Estimated Fair Value	$ 350,521	$ 327,865

General - Income Taxes (Details

General - Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Income Taxes
Effective income tax rates (as a percent)	(0.70%)	40.30%
Statutory federal income tax rate (as a percent)	21.00%		35.00%
Deferred Tax Assets, Valuation Allowance	$ 2.4		$ 2.4
Federal
Income Taxes
Operating Loss Carryforwards	38.8
State
Income Taxes
Operating Loss Carryforwards	93.7
AlphaCare | Federal
Income Taxes
Operating Loss Carryforwards	$ 37.6

General - Health Care Reform (D

General - Health Care Reform (Details) $ in Millions	3 Months Ended
	Mar. 31, 2018USD ($)
General
HIF fees	$ 30.4

General - Stock Compensation (D

General - Stock Compensation (Details) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2018USD ($)company$ / sharesshares	Mar. 31, 2017USD ($)
Stock options, Non vested restricted stock awards and nonvested restricted stock units
Stock compensation expense | $	$ 7.6	$ 10.1
Benefits of tax deductions in excess of recognized stock compensation expense | $	$ 4.1	$ 0.9
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)	$ 25.79
Expected volatility (as a percent)	28.21%
Stock option activity
Outstanding, beginning of period (in shares) | shares	2,458,237
Granted (in shares) | shares	399,706
Forfeited (in shares) | shares	(8,321)
Exercised (in shares) | shares	(299,873)
Outstanding, end of period (in shares) | shares	2,549,749
Vested and expected to vest end of period (in shares) | shares	2,522,274
Exercisable, end of period (in shares) | shares	1,537,926
Weighted average exercise price of stock options
Outstanding, beginning of period (in dollars per share)	$ 61.50
Granted (in dollars per share)	99.46
Forfeited (in dollars per share)	48.01
Exercised (in dollars per share)	57.14
Outstanding, end of period (in dollars per share)	67.96
Vested and expected to vest end of period (in dollars per share)	59.59
Exercisable, end of period (in dollars per share)	$ 67.76
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) | shares	31,102
Outstanding, end of period (in shares) | shares	31,102
Weighted average exercise price of nonvested restricted stock award and units
Outstanding, beginning of period (in dollars per share)	$ 68
Outstanding, end of period (in dollars per share)	$ 68
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	24 months
Restricted Stock Units (RSUs)
Nonvested restricted stock awards and units
Outstanding, beginning of period (in shares) | shares	163,289
Awarded (in shares) | shares	109,348
Vested (in shares) | shares	(80,070)
Forfeited (in shares) | shares	(4,349)
Outstanding, end of period (in shares) | shares	188,218
Weighted average exercise price of nonvested restricted stock award and units
Outstanding, beginning of period (in dollars per share)	$ 66.46
Awarded (in dollars per share)	99.45
Vested (in dollars per share)	65.41
Forfeited (in dollars per share)	67.60
Outstanding, end of period (in dollars per share)	$ 86.05
Assumptions used for estimating value of awards granted
Vesting period	3 years
Performance Based Restricted Stock Units (“PSUs”)
Nonvested restricted stock awards and units
Outstanding, beginning of period (in shares) | shares	202,315
Awarded (in shares) | shares	80,502
Vested (in shares) | shares	(33,592)
Forfeited (in shares) | shares	(1,469)
Outstanding, end of period (in shares) | shares	247,756
Estimated fair value	$ 141.61
Weighted average exercise price of nonvested restricted stock award and units
Outstanding, beginning of period (in dollars per share)	84.63
Awarded (in dollars per share)	141.61
Vested (in dollars per share)	85
Forfeited (in dollars per share)	85.29
Outstanding, end of period (in dollars per share)	$ 103.09
Assumptions used for estimating value of awards granted
Vesting period	3 years
Expected dividend yield (as a percent)	0.00%
Risk-free interest rate (as a percent)	2.37%
Expected volatility, minimum (as a percent)	20.00%
Expected volatility, maximum (as a percent)	82.00%
Expected volatility, average (as a percent)	35.00%
Number of trading days considered for average share value	30 days
Number of companies in peer group | company	49
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 - Long Term Debt and Ca

General - Long Term Debt and Capital Lease Obligation (Details) - USD ($) $ in Thousands	Sep. 22, 2017	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Long-term Debt and Capital Lease Obligations
Proceeds from issuance of debt			$ 200,000
Debt disclosures
Capital lease obligations		$ 21,400		$ 22,900
Deferred loan issuance cost		6,300		6,600
4.400% Senior Notes due 2024
Long-term Debt and Capital Lease Obligations
Aggregate principal amount of Senior Notes	$ 400,000	399,300		399,300
Stated interest rate (as a percent)	4.40%
Redemption price as a percentage of the principal amount being redeemed	100.00%
2017 Credit Agreement
Debt disclosures
Letters of credit outstanding		17,600
Revolving borrowings outstanding		42,500		92,500
Available borrowing capacity		$ 339,900
2017 Credit Agreement | Revolving Loan borrowings
Long-term Debt and Capital Lease Obligations
Maximum borrowing capacity	$ 400,000
Commitment commission (as a percent)		0.20%
2017 Credit Agreement | Term Loan
Long-term Debt and Capital Lease Obligations
Maximum borrowing capacity	$ 350,000
Weighted average interest rate (as a percent)		3.163%
Long-term Debt, Fiscal Year Maturity
2,018		$ 13,100
2,019		17,500
2,020		17,500
2,021		17,500
2,022		275,600
2017 Credit Agreement | Prime rate
Long-term Debt and Capital Lease Obligations
Basis spread on variable rate (as a percent)	0.50%
2017 Credit Agreement | Overnight Federal Funds rate
Long-term Debt and Capital Lease Obligations
Basis spread on variable rate (as a percent)	0.50%
2017 Credit Agreement | Eurodollar rate for one month
Long-term Debt and Capital Lease Obligations
Basis spread on variable rate (as a percent)	1.00%
2017 Credit Agreement | Eurodollar rate for selected interest period
Long-term Debt and Capital Lease Obligations
Basis spread on variable rate (as a percent)	1.50%
Standby Letters of Credit with The Bank Of Tokyo-Mitsubishi UFJ, Ltd.
Debt disclosures
Letters of credit outstanding		$ 48,500		$ 26,500

Net Income per Common Share A41

Net Income per Common Share Attributable to Magellan Health, Inc (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Numerator:
Net income attributable to Magellan	$ 11,452	$ 17,747
Denominator:
Weighted average number of common shares outstanding-basic (in shares)	24,349	23,012
Common stock equivalents-stock options (in shares)	806	474
Common stock equivalents-RSAs (in shares)	24	402
Common stock equivalents-RSUs (in shares)	77	81
Common stock equivalents- PSUs( in shares)	353	66
Common stock equivalents-employee stock purchase plan (in shares)	3	3
Weighted average number of common shares outstanding-diluted (in shares)	25,612	24,038
Net income per common share-basic (in dollars per share)	$ 0.47	$ 0.77
Net income per common share-diluted (in dollars per share)	$ 0.45	$ 0.74
Potential dilutive securities excluded from computation of dilutive securities (in shares)	200	600

Business Segment Information -

Business Segment Information - Operating Results by Segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Operating results by business segment
Net revenue	$ 1,805,077	$ 1,305,623
Cost of care	(928,661)	(482,054)
Cost of goods sold	(559,665)	(542,633)
Direct service costs and other	(269,077)	(221,486)
Stock compensation expense	7,646	10,140
Changes in fair value of contingent consideration	233	(49)
Less: non-controlling interest segment profit (loss)		(278)
Segment profit (loss)	55,553	69,819
Managed care and other
Operating results by business segment
Net revenue	1,219,763	729,340
PBM
Operating results by business segment
Net revenue	585,314	576,283
Operating segments | Healthcare
Operating results by business segment
Cost of care	(928,661)	(482,054)
Direct service costs and other	(186,246)	(138,968)
Stock compensation expense	2,950	2,659
Changes in fair value of contingent consideration	233	(49)
Less: non-controlling interest segment profit (loss)		(277)
Segment profit (loss)	45,877	47,241
Operating segments | Healthcare | Managed care and other
Operating results by business segment
Net revenue	1,157,601	665,376
Operating segments | Pharmacy Management
Operating results by business segment
Cost of goods sold	(604,913)	(571,837)
Direct service costs and other	(75,586)	(75,853)
Stock compensation expense	1,485	5,730
Segment profit (loss)	15,491	28,966
Operating segments | Pharmacy Management | Managed care and other
Operating results by business segment
Net revenue	62,307	64,180
Operating segments | Pharmacy Management | PBM
Operating results by business segment
Net revenue	632,198	606,746
Corporate and Elimination
Operating results by business segment
Cost of goods sold	45,248	29,204
Direct service costs and other	(7,245)	(6,665)
Stock compensation expense	3,211	1,751
Less: non-controlling interest segment profit (loss)		(1)
Segment profit (loss)	(5,815)	(6,388)
Corporate and Elimination | Managed care and other
Operating results by business segment
Net revenue	(145)	(216)
Corporate and Elimination | PBM
Operating results by business segment
Net revenue	$ (46,884)	$ (30,463)

Business Segment Information 43

Business Segment Information - Reconciliation of Segment Profit to Income Before Taxes (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Reconciliation of segment profit to income before income taxes
Income before income taxes	$ 11,377	$ 29,275
Stock compensation expense	7,646	10,140
Changes in fair value of contingent consideration	233	(49)
Non-controlling interest segment (profit) loss		278
Depreciation and amortization	30,407	26,976
Interest expense	8,366	4,148
Interest and other income	(2,476)	(949)
Segment Profit	$ 55,553	$ 69,819

Commitments and Contingencies44

Commitments and Contingencies (Details) - USD ($) $ / shares in Units, $ in Millions	2 Months Ended	3 Months Ended	4 Months Ended	12 Months Ended		27 Months Ended
	Dec. 31, 2015	Mar. 31, 2018	Apr. 30, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Oct. 26, 2015
Stock Repurchases
Percentage of total net revenues generated by AFSC		2.00%		3.00%
Share repurchases made in open market (in shares)			0
October 2015 Share Repurchase Program
Stock Repurchases
Amount authorized under stock repurchase plan							$ 200
Share repurchases made in open market (in shares)	345,044			280,140	1,828,183	2,453,367
Average Price Paid per Share (in dollars per share)	$ 53.46			$ 77.67	$ 58.40
Aggregate Cost	$ 18.4			$ 21.8	$ 106.8	$ 147

Acquisitions (Details)

Acquisitions (Details) - SWH Acquisition - USD ($) $ in Millions	Oct. 31, 2017	Mar. 31, 2018
Acquisitions
Amount of consideration paid in cash	$ 400
Incentive payment for Medicare & Medicaid Services Star Rating	$ 10
Increase (decrease) in goodwill due to measurement period adjustment		$ 6.9
Working capital receivable		$ 0.3