Item 8.01. Other Events
As previously announced on November 7, 2019, Magellan Health Services, Inc. (the “Company”) was notified that the California Department of Health Services (“DHCS”) issued a Notice of Intent to Award a contract to the Company’s subsidiary, Magellan Medicaid Administration, Inc., for the provision of pharmacy benefit administration services statewide for a term of approximately four (4) years and eleven (11) months. On December 20, 2019, DHCS and the Company entered into a contract on the terms described herein. DHCS will also have five (5) 1-year optional extension periods under the contract. The Company estimates annualized revenue from the contract to be approximately $73 million. The Notice of Intent to Award was subject to the negotiation of a definitive contract and the expiration of a protest period within which unsuccessful bidders had the right to protest the award. One unsuccessful bidder filed a timely protest of the Notice of Intent to Award the contract. On December 11, 2019, the hearing officer assigned to determine the protest issued a decision upholding the contract award to Magellan Medicaid Administration, Inc. There is no assurance that the unsuccessful bidder will not file an action in California state court seeking to overturn the hearing officer’s decision and contract award.
Cautionary Statement
This 8-K contains forward-looking statements within the meaning of the Securities Exchange Act of 1934 and the Securities Act of 1933, as amended, which involve a number of risks and uncertainties. All statements, other than statements of historical information provided herein, may be deemed to be forward-looking statements including, without limitation, statements regarding the estimated annualized revenues from the contract. These statements are based on management’s analysis, judgment, belief and expectation only as of the date hereof, and are subject to uncertainty and changes in circumstances. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” “may,” “should,” “could,” “estimate,” “intend” and other similar expressions are intended to identify forward-looking statements. Actual results could differ materially due to, among other things, the possible election of certain of the company’s customers to manage the healthcare services of their members directly; changes in rates paid to and/or by the company by customers and/or providers; higher utilization of health care services by the company’s risk members; delays, higher costs or inability to implement new business or other company initiatives; the impact of changes in the contracting model for Medicaid contracts; termination or non-renewal of customer contracts; the impact of new or amended laws or regulations; governmental inquiries; litigation; competition; operational issues; health care reform; and general business conditions. Additional factors that could cause actual results to differ materially from those reflected in the forward-looking statements include, but are not limited to, the risks discussed in the “Risk Factors” section included within the company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission on February 28, 2019, and the company’s subsequent Quarterly Reports on Form 10-Q filed during 2019. Readers are cautioned not to place undue reliance on these forward-looking statements.
