Document and Entity Information
Document and Entity Information - USD ($) $ / shares in Units, $ in Billions | 12 Months Ended | ||
Dec. 31, 2020 | Feb. 19, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
Entity Central Index Key | 0000019411 | ||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2020 | ||
Document Transition Report | false | ||
Entity File Number | 1-6639 | ||
Entity Registrant Name | MAGELLAN HEALTH, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 58-1076937 | ||
Entity Address, Address Line One | 4801 E. Washington Street | ||
Entity Address, City or Town | Phoenix | ||
Entity Address, State or Province | AZ | ||
Entity Address, Postal Zip Code | 85034 | ||
City Area Code | 800 | ||
Local Phone Number | 642-1716 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Listing, Par Value Per Share | $ 0.01 | ||
Title of 12(b) Security | Common Stock, par value $0.01 per share | ||
Trading Symbol | MGLN | ||
Security Exchange Name | NASDAQ | ||
Entity Public Float | $ 1.8 | ||
Entity Common Stock, Shares Outstanding | 25,965,579 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash and cash equivalents ($51,253 and $49,227 restricted at December 31, 2019 and December 31, 2020, respectively) | $ 1,144,450 | $ 115,752 |
Accounts receivable, net | 743,502 | 680,569 |
Short-term investments ($82,772 and $88,867 restricted at December 31, 2019 and December 31, 2020, respectively) | 140,847 | 98,797 |
Pharmaceutical inventory | 43,334 | 44,962 |
Other current assets ($36,215 and $43,547 restricted at December 31, 2019 and December 31, 2020, respectively) | 84,264 | 69,687 |
Current portion of assets held for sale | 663,276 | |
Total Current Assets | 2,156,397 | 1,673,043 |
Property and equipment, net | 136,739 | 131,712 |
Long-term investments ($2,307 and $1,026 restricted at December 31, 2019 and December 31, 2020, respectively) | 2,612 | 2,864 |
Deferred income taxes | 1,842 | 1,840 |
Other long-term assets | 108,797 | 58,905 |
Goodwill | 873,779 | 806,421 |
Other intangible assets, net | 79,689 | 81,675 |
Assets held for sale, less current portion | 335,713 | |
Total Assets | 3,359,855 | 3,092,173 |
Current Liabilities: | ||
Accounts payable | 137,380 | 83,790 |
Accrued liabilities | 354,906 | 191,854 |
Medical claims payable | 111,851 | 128,114 |
Other medical liabilities | 126,921 | 92,915 |
Current debt, finance lease and deferred financing obligations | 6,521 | 3,491 |
Current portion of liabilities held for sale | 409,983 | |
Total Current Liabilities | 737,579 | 910,147 |
Long-term debt, finance lease and deferred financing obligations | 631,855 | 679,125 |
Deferred income taxes | 7,102 | 1,971 |
Tax contingencies | 11,002 | 9,453 |
Deferred credits and other long-term liabilities | 69,283 | 56,393 |
Liabilities held for sale, less current portion | 37,301 | |
Total Liabilities | 1,456,821 | 1,694,390 |
Redeemable non-controlling interest | 33,062 | |
STOCKHOLDERS' EQUITY | ||
Preferred stock, par value $.01 per share Authorized - 10,000 shares at December 31, 2019 and December 31, 2020-Issued and outstanding-none | ||
Common stock, par value $.01 per share: Authorized - 100,000 shares at December 31, 2019 and December 31, 2020-Issued and outstanding-54,285 and 24,623 shares at December 31, 2019, respectively, and 55,549 and 25,887 shares at December 31, 2020, respectively | 555 | 543 |
Other Stockholders' Equity: | ||
Additional paid-in capital | 1,477,219 | 1,386,616 |
Retained earnings | 1,857,130 | 1,475,207 |
Accumulated other comprehensive income (loss) | (205) | 144 |
Treasury stock, at cost, 29,662 and 29,662 shares at December 31, 2019 and December 31, 2020, respectively | (1,464,727) | (1,464,727) |
Total Stockholders' Equity | 1,869,972 | 1,397,783 |
Total Liabilities and Stockholders' Equity | $ 3,359,855 | $ 3,092,173 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Restricted cash and cash equivalents | ||
Restricted cash and cash equivalents | $ 49,227 | $ 51,253 |
Restricted investments, short-term and long-term | ||
Short-term restricted investments | 88,867 | 82,772 |
Long term restricted investments | 1,026 | 2,307 |
Other current restricted assets | ||
Other current restricted assets | $ 43,547 | $ 36,215 |
Preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 10,000 | 10,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 100,000 | 100,000 |
Common stock, issued (in shares) | 55,549 | 54,285 |
Common stock, outstanding (in shares) | 25,887 | 24,623 |
Treasury stock | ||
Treasury stock (in shares) | 29,662 | 29,662 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Net revenue: | |||||||||||
Net revenue | $ 1,184,960 | $ 1,170,117 | $ 1,100,075 | $ 1,122,379 | $ 1,133,775 | $ 1,158,543 | $ 1,154,289 | $ 1,119,006 | $ 4,577,531 | $ 4,565,613 | $ 4,957,522 |
Costs and expenses: | |||||||||||
Cost of care | 362,478 | 364,438 | 321,831 | 349,108 | 367,819 | 397,697 | 408,911 | 369,097 | 1,397,855 | 1,543,524 | 1,554,691 |
Cost of goods sold | 559,140 | 560,269 | 528,067 | 533,241 | 507,917 | 523,973 | 501,081 | 526,314 | 2,180,717 | 2,059,285 | 2,452,703 |
Direct service costs and other operating expenses | 259,401 | 216,770 | 199,756 | 204,241 | 207,616 | 195,844 | 195,907 | 202,300 | 880,168 | 801,667 | 773,915 |
Depreciation and amortization | 26,411 | 24,730 | 23,888 | 23,358 | 27,869 | 28,890 | 28,191 | 25,417 | 98,387 | 110,367 | 112,284 |
Interest expense | 6,626 | 7,286 | 7,995 | 8,958 | 8,826 | 8,935 | 9,070 | 9,037 | 30,865 | 35,868 | 35,180 |
Interest and other income | (1,935) | (349) | (551) | (1,219) | (1,578) | (1,699) | (1,821) | (1,759) | (4,054) | (6,857) | (4,884) |
Special charges | 9,170 | 16,599 | 8,309 | 34,078 | |||||||
Total costs and expenses | 1,221,291 | 1,189,743 | 1,089,295 | 1,117,687 | 1,118,469 | 1,153,640 | 1,141,339 | 1,130,406 | 4,618,016 | 4,543,854 | 4,923,889 |
Income (loss) from continuing operations before income taxes | (36,331) | (19,626) | 10,780 | 4,692 | 15,306 | 4,903 | 12,950 | (11,400) | (40,485) | 21,759 | 33,633 |
Provision (benefit) for income taxes | (11,635) | (2,330) | (36,328) | 5,762 | 5,854 | 782 | 5,735 | (3,209) | (44,531) | 9,162 | 11,457 |
Net income from continuing operations | (24,696) | (17,296) | 47,108 | (1,070) | 9,452 | 4,121 | 7,215 | (8,191) | 4,046 | 12,597 | 22,176 |
Income from discontinued operations, net of tax | 293,629 | 28,943 | 36,397 | 19,320 | 11,132 | 17,153 | 6,398 | 8,622 | 378,289 | 43,305 | 2,005 |
Net income | $ 268,933 | $ 11,647 | $ 83,505 | $ 18,250 | $ 20,584 | $ 21,274 | $ 13,613 | $ 431 | $ 382,335 | $ 55,902 | $ 24,181 |
Basic | |||||||||||
Continuing operations (in dollars per share) | $ (0.96) | $ (0.68) | $ 1.88 | $ (0.04) | $ 0.39 | $ 0.17 | $ 0.30 | $ (0.34) | $ 0.16 | $ 0.52 | $ 0.91 |
Discontinued operations (in dollars per share) | 11.39 | 1.14 | 1.45 | 0.78 | 0.45 | 0.70 | 0.26 | 0.36 | 14.98 | 1.79 | 0.08 |
Consolidated operations (in dollars per share) | 10.43 | 0.46 | 3.33 | 0.74 | 0.84 | 0.87 | 0.56 | 0.02 | 15.14 | 2.31 | 0.99 |
Net income per common share - diluted: | |||||||||||
Continuing operations (in dollars per share) | (0.96) | (0.68) | 1.86 | (0.04) | 0.38 | 0.17 | 0.30 | (0.34) | 0.16 | 0.51 | 0.89 |
Discontinued operations (in dollars per share) | 11.39 | 1.14 | 1.44 | 0.78 | 0.45 | 0.69 | 0.26 | 0.36 | 14.82 | 1.76 | 0.08 |
Consolidated operations (in dollars per share) | $ 10.43 | $ 0.46 | $ 3.30 | $ 0.74 | $ 0.83 | $ 0.86 | $ 0.56 | $ 0.02 | $ 14.98 | $ 2.27 | $ 0.97 |
Managed care and other | |||||||||||
Net revenue: | |||||||||||
Net revenue | $ 579,454 | $ 568,688 | $ 548,711 | $ 553,168 | $ 580,544 | $ 591,229 | $ 608,614 | $ 566,548 | $ 2,250,021 | $ 2,346,935 | $ 2,350,576 |
PBM | |||||||||||
Net revenue: | |||||||||||
Net revenue | $ 605,506 | $ 601,429 | $ 551,364 | $ 569,211 | $ 553,231 | $ 567,314 | $ 545,675 | $ 552,458 | $ 2,327,510 | $ 2,218,678 | $ 2,606,946 |
CONSOLIDATED STATEMENTS OF IN_2
CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
CONSOLIDATED STATEMENTS OF INCOME | |
Stock compensation expense | $ 28,936 |
Changes in fair value of contingent consideration | $ (1,108) |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net income | $ 382,335 | $ 55,902 | $ 24,181 |
Other comprehensive income: | |||
Unrealized (loss) gain on available-for-sale securities | (349) | 468 | 56 |
Comprehensive income (loss) attributable to Magellan | $ 381,986 | $ 56,370 | $ 24,237 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net of income tax (benefit) provision | $ (124) | $ 150 | $ 18 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Common Stock In Treasury | Additional Paid in Capital | Retained EarningsCumulative Effect, Period of Adoption, Adjustment | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Cumulative Effect, Period of Adoption, Adjustment | Total |
Balance at Dec. 31, 2017 | $ 530 | $ (1,397,962) | $ 1,274,811 | $ (4,227) | $ 1,399,495 | $ (380) | $ (4,227) | $ 1,276,494 |
Balance (in shares) at Dec. 31, 2017 | 52,973,000 | (28,771,000) | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Stock compensation expense | 29,472 | 29,472 | ||||||
Exercise of stock options | $ 4 | 23,060 | $ 23,064 | |||||
Exercise of stock options (in shares) | 409,000 | 409,208 | ||||||
Issuance of equity | $ 1 | (698) | $ (697) | |||||
Issuance of equity (in shares) | 154,000 | |||||||
Repurchase of stock | $ (63,040) | (63,040) | ||||||
Repurchase of stock (in shares) | (830,000) | |||||||
Net income | 24,181 | 24,181 | ||||||
Other comprehensive income (loss)-other | 56 | 56 | ||||||
Balance at Dec. 31, 2018 | $ 535 | $ (1,461,002) | 1,326,645 | (144) | 1,419,449 | (324) | (144) | 1,285,303 |
Balance (in shares) at Dec. 31, 2018 | 53,536,000 | (29,601,000) | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Stock compensation expense | 25,501 | 25,501 | ||||||
Exercise of stock options | $ 7 | 32,708 | $ 32,715 | |||||
Exercise of stock options (in shares) | 543,000 | 543,752 | ||||||
Issuance of equity | $ 1 | 1,762 | $ 1,763 | |||||
Issuance of equity (in shares) | 206,000 | |||||||
Repurchase of stock | $ (3,725) | (3,725) | ||||||
Repurchase of stock (in shares) | (61,000) | |||||||
Net income | 55,902 | 55,902 | ||||||
Other comprehensive income (loss)-other | 468 | 468 | ||||||
Balance at Dec. 31, 2019 | $ 543 | $ (1,464,727) | 1,386,616 | $ (412) | 1,475,207 | 144 | $ (412) | $ 1,397,783 |
Balance (in shares) at Dec. 31, 2019 | 54,285,000 | (29,662,000) | 24,623,000 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Stock compensation expense | 25,450 | $ 25,450 | ||||||
Exercise of stock options | $ 11 | 64,518 | $ 64,529 | |||||
Exercise of stock options (in shares) | 1,041,000 | 1,042,186 | ||||||
Issuance of equity | $ 1 | 635 | $ 636 | |||||
Issuance of equity (in shares) | 223,000 | |||||||
Net income | 382,335 | 382,335 | ||||||
Other comprehensive income (loss)-other | (349) | (349) | ||||||
Balance at Dec. 31, 2020 | $ 555 | $ (1,464,727) | $ 1,477,219 | $ 1,857,130 | $ (205) | $ 1,869,972 | ||
Balance (in shares) at Dec. 31, 2020 | 55,549,000 | (29,662,000) | 25,887,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities: | |||
Net income | $ 382,335 | $ 55,902 | $ 24,181 |
Adjustments to reconcile net income to net cash from operating activities: | |||
Depreciation and amortization | 118,745 | 131,509 | 132,660 |
Special charges | 34,078 | ||
Gain on sale of MCC | (348,145) | ||
Non-cash interest expense | 1,652 | 1,537 | 1,221 |
Non-cash stock compensation expense | 25,450 | 25,501 | 29,472 |
Non-cash income tax (benefit) provision | (10,435) | 7,052 | (1,725) |
Non-cash accretion (amortization) on investments | 4,282 | (433) | 1,344 |
Changes in assets and liabilities, net of effects from acquisitions of businesses: | |||
Accounts receivable, net | 17,078 | (133,999) | (99,295) |
Pharmaceutical inventory | 1,628 | (4,144) | 127 |
Other assets | (48,328) | 19,492 | (25,774) |
Accounts payable and accrued liabilities | 225,055 | 56,843 | 9,139 |
Medical claims payable and other medical liabilities | 44,449 | (28,969) | 72,347 |
Contingent consideration | (3,877) | 1,307 | |
Tax contingencies | (3,075) | (1,352) | 1,803 |
Deferred credits and other long-term liabilities | 6,361 | (10,668) | 18,020 |
Other | (369) | 1,452 | 17 |
Net cash provided by operating activities | 450,761 | 115,846 | 164,844 |
Net cash provided by (used in) operating activities from discontinued operations | 271,256 | (67,768) | 47,287 |
Net cash provided by operating activities from continuing operations | 179,505 | 183,614 | 117,557 |
Cash flows from investing activities: | |||
Capital expenditures | (75,480) | (60,402) | (68,275) |
Acquisitions and investments in businesses, net of cash acquired | (100,604) | (727) | (958) |
Sale of MCC | 1,013,828 | ||
Purchases of investments | (804,150) | (514,324) | (557,232) |
Proceeds from maturities and sales of investments | 645,345 | 555,960 | 498,032 |
Net cash (used in) provided by investing activities | 678,939 | (19,493) | (128,433) |
Net cash (used in) provided by investing activities from discontinued operations | (119,017) | 41,830 | (47,762) |
Net cash (used in) provided by investing activities from continuing operations | 797,956 | (61,323) | (80,671) |
Cash flows from financing activities: | |||
Proceeds from borrowings on revolving line of credit | 80,000 | ||
Payments to acquire treasury stock | (4,125) | (62,640) | |
Proceeds from exercise of stock options | 64,167 | 32,708 | 23,064 |
Payments on debt, finance lease and deferred financing obligations | (131,667) | (67,511) | (122,239) |
Payments on contingent consideration | (6,247) | ||
Other | 637 | 1,763 | (1,020) |
Net cash (used in) provided by financing activities | 13,137 | (43,412) | (162,835) |
Net cash (used in) provided by financing activities from discontinued operations | (38,100) | 50,050 | (50,900) |
Net cash (used in) provided by financing activities from continuing operations | 51,237 | (93,462) | (111,935) |
Net (decrease) increase in cash and cash equivalents from continuing operations | 1,028,698 | 28,829 | (75,049) |
Cash and cash equivalents at beginning of period | 115,752 | 86,923 | 161,972 |
Cash and cash equivalents at end of period | $ 1,144,450 | $ 115,752 | $ 86,923 |
General
General | 12 Months Ended |
Dec. 31, 2020 | |
General | |
General | 1. General Basis of Presentation The consolidated financial statements of Magellan Health, Inc., a Delaware corporation (“Magellan”), include Magellan and its subsidiaries (together with Magellan, the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation. On December 31, 2020, Magellan Health, Inc. (the “Company”) completed the sale of its Magellan Complete Care business (the “MCC Business”) to Molina Healthcare, Inc. (“Molina”), pursuant to a Stock and Asset Purchase Agreement, dated as of April 30, 2020, by and between the Company and Molina, for cash in the amount of $850 million plus closing adjustments of $158 million (subject to post-closing adjustments, if any), and the assumption by Molina of liabilities of the MCC Business (the “MCC Sale”). The MCC Business was the Company’s business of contracting with state Medicaid agencies and the U.S. Centers for Medicare and Medicaid Services to manage total medical benefits or long-term support services for Medicaid and dual eligible Medicaid and Medicare populations. On January 4, 2021, the Company and Centene Corporation (“Centene”) entered into an Agreement of Plan of Merger (the “Merger Agreement”) by and among the Company, Centene, and Mayflower Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Centene (“Merger Sub”), pursuant to which, subject to the terms and conditions set forth therein, Merger Sub will merge with and into the Company, with the Company surviving such merger as a wholly-owned subsidiary of Centene. The Company expects to complete the transaction in the second half of 2021. Business Overview The Company provides managed care and pharmacy solutions for some of the most complex areas of healthcare. The Company offers innovative solutions that combine analytics, technology and clinical rigor to drive better decision making, positively impact members’ health outcomes and optimize the cost of care for the customers Magellan serves. The Company provides services to health plans and other managed care organizations (“MCOs”), employers, labor unions, various military and governmental agencies and third-party administrators (“TPAs”). Magellan operates three segments: Healthcare, Pharmacy Management and Corporate. Healthcare Segment The Healthcare segment (“Healthcare”) previously consisted of two reporting units – Behavioral & Specialty Health and Magellan Complete Care (“MCC”). As a result of the sale of the MCC Business to Molina, the Healthcare segment now only includes the Behavioral and Specialty Health reporting unit. The Behavioral & Specialty Health reporting unit’s customers include health plans, accountable care organizations (“ACOs”), employers, the United States military and various federal government agencies for whom Magellan provides carve-out management services for (i) behavioral health, (ii) employee assistance plans (“EAP”) and (iii) other areas of specialty healthcare including diagnostic imaging, musculoskeletal management, cardiac and physical medicine. These management services can be applied broadly across commercial, Medicaid and Medicare populations, or on a more targeted basis for our health plans and ACO customers. The Behavioral & Specialty Health unit also includes Magellan’s carve-out behavioral health contracts with various state Medicaid agencies, as well as certain provider assets that deliver primary care and behavioral healthcare services through an integrated approach. The MCC Business, which is now reflected as discontinued operations, contracts with state Medicaid agencies and the Centers for Medicare and Medicaid Services (“CMS”) to manage care for beneficiaries under various Medicaid and Medicare programs. MCC manages a wide range of services from total medical cost to carve out long-term support services. MCC largely focuses on managing care for more acute special populations including individuals with serious mental illness (“SMI”), dual eligibles, aged, blind and disabled (“ABD”) and other populations with unique and often complex healthcare needs. 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. In addition to the Company’s provider assets where it provides treatment services in certain geographies, the Company also employs licensed behavioral health counselors to deliver non-medical counseling under certain government contracts. The Company provides its Healthcare management services primarily through: (i) risk-based contractual arrangements, where the Company assumes all or a substantial portion of the responsibility for the cost of providing treatment services in exchange for a fixed per member per month (“PMPM”) fee, or (ii) administrative services only (“ASO”) contractual arrangements, where the Company provides services such as utilization review, claims administration and/or provider network management, but does not assume full responsibility for the cost of the treatment services, in exchange for an administrative fee and, in some instances, a gain share. Pharmacy Management The Pharmacy Management segment (“Pharmacy Management”) is comprised of services that provide clinical and financial management of pharmaceuticals paid under both the medical and the pharmacy benefit. Pharmacy Management’s customer solutions include: (i) pharmacy benefit management (“PBM”) services, including pharmaceutical dispensing operations and Medicare Part D; (ii) pharmacy benefit administration (“PBA”) for state Medicaid and other government sponsored programs; (iii) clinical and formulary management programs; (iv) medical pharmacy management programs; and (v) programs for the integrated management of specialty drugs across both the medical and pharmacy benefit that treat complex conditions, regardless of site of service, method of delivery, or benefit reimbursement. These services are available individually, in combination, or in a fully integrated manner. The Company markets its pharmacy management services to managed care organizations, employers, third party administrators, state governments, Medicare Part D, and other government agencies, exchanges, brokers and consultants. In addition, the Company will continue to upsell its pharmacy services to its existing customers and market its pharmacy solutions to the Healthcare customer base. Pharmacy Management contracts with its customers for services using risk-based, gain share or ASO arrangements. In addition, Pharmacy Management provides services to the Healthcare segment for most of the MCC business. On May 11, 2020, the Company announced its decision to exit the Medicare Part D business at the end of 2020. The Company will retain its Medicare Employer Group Waiver Plan as well as full capabilities to serve the PBM needs of its existing and prospective Medicare customers. Corporate This segment of the Company is comprised primarily of amounts not allocated to the Healthcare and Pharmacy Management segments that are largely associated with costs related to being a publicly traded company. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Recent Accounting Pronouncements 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” or “ASC 326”). 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 adopted ASC 326 on a modified retrospective basis on January 1, 2020. The adoption of ASC 326 did not have a material impact on the Company’s consolidated results of operation, 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, and was adopted by the Company in the quarter ended March 31, 2020 In August 2018, the FASB issued ASU No. 2018-15, “Intangibles-Goodwill and Other–Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”). This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance is effective for annual and interim periods of public entities beginning after December 15, 2019, and was adopted by the Company in the quarter ended March 31, 2020 In December 2019, the FASB issued ASU 2019-12, “Income Taxes – Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing several exceptions in the current standard and adding guidance to reduce the complexity in certain areas, such as requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company did not adopt ASU 2019-12 as of the year ended 2020 but plans to adopt in the first quarter of 2021. The Company does not expect the impact of ASU 2019-12 to be material to its consolidated financial statements. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates of the Company can include, among other things, valuation of goodwill and intangible assets, medical claims payable, other medical liabilities, stock compensation assumptions, tax contingencies and legal liabilities. In addition, the Company also makes estimates in relation to revenue recognition under Accounting Standard Codification 606 (“ASC 606”) which are explained in more detail in “ Revenue Recognition Revenue Recognition Year Ended December 31, 2018 Healthcare Pharmacy Management Elimination Total Major Service Lines Behavioral & Specialty Health Risk-based, non-EAP $ 1,511,532 $ — $ (263) $ 1,511,269 EAP risk-based 349,751 — — 349,751 ASO 249,473 34,130 (344) 283,259 PBM, including dispensing — 2,183,151 (18,471) 2,164,680 Medicare Part D — 442,266 — 442,266 PBA — 132,112 — 132,112 Formulary management — 70,900 — 70,900 Other — 3,285 — 3,285 Total net revenue $ 2,110,756 $ 2,865,844 $ (19,078) $ 4,957,522 Type of Customer Government $ 899,515 $ 946,606 $ — $ 1,846,121 Non-government 1,211,241 1,919,238 (19,078) 3,111,401 Total net revenue $ 2,110,756 $ 2,865,844 $ (19,078) $ 4,957,522 Timing of Revenue Recognition Transferred at a point in time $ — $ 2,625,417 $ (18,471) $ 2,606,946 Transferred over time 2,110,756 240,427 (607) 2,350,576 Total net revenue $ 2,110,756 $ 2,865,844 $ (19,078) $ 4,957,522 Year Ended December 31, 2019 Healthcare Pharmacy Management Elimination Total Major Service Lines Behavioral & Specialty Health Risk-based, non-EAP $ 1,504,472 $ — $ (290) $ 1,504,182 EAP risk-based 339,377 — — 339,377 ASO 238,239 40,348 (302) 278,285 PBM, including dispensing — 1,949,225 (18,151) 1,931,074 Medicare Part D — 287,604 — 287,604 PBA — 137,885 — 137,885 Formulary management — 84,567 — 84,567 Other — 2,639 — 2,639 Total net revenue $ 2,082,088 $ 2,502,268 $ (18,743) $ 4,565,613 Type of Customer Government $ 916,542 $ 831,673 $ — $ 1,748,215 Non-government 1,165,546 1,670,595 (18,743) 2,817,398 Total net revenue $ 2,082,088 $ 2,502,268 $ (18,743) $ 4,565,613 Timing of Revenue Recognition Transferred at a point in time $ — $ 2,236,829 $ (18,151) $ 2,218,678 Transferred over time 2,082,088 265,439 (592) 2,346,935 Total net revenue $ 2,082,088 $ 2,502,268 $ (18,743) $ 4,565,613 Year Ended December 31, 2020 Healthcare Pharmacy Management Elimination Total Major Service Lines Behavioral & Specialty Health Risk-based, non-EAP $ 1,399,532 $ — $ (388) $ 1,399,144 EAP risk-based 315,306 — — 315,306 ASO 245,031 46,892 (315) 291,608 PBM, including dispensing — 2,103,702 (19,936) 2,083,766 Medicare Part D — 243,744 — 243,744 PBA — 136,155 — 136,155 Formulary management — 104,891 — 104,891 Other — 2,917 — 2,917 Total net revenue $ 1,959,869 $ 2,638,301 $ (20,639) $ 4,577,531 Type of Customer Government $ 935,138 $ 821,681 $ — $ 1,756,819 Non-government 1,024,731 1,816,620 (20,639) 2,820,712 Total net revenue $ 1,959,869 $ 2,638,301 $ (20,639) $ 4,577,531 Timing of Revenue Recognition Transferred at a point in time $ — $ 2,347,446 $ (19,936) $ 2,327,510 Transferred over time 1,959,869 290,855 (703) 2,250,021 Total net revenue $ 1,959,869 $ 2,638,301 $ (20,639) $ 4,577,531 Per Member Per Month (“PMPM”) Revenue. 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, collecting 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. st Pharmacy Benefit Administration 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. 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 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 December 31, December 31, 2019 2020 $ Change % Change Accounts receivable $ 717,455 $ 799,803 $ 82,348 11.5% Contract assets 2,162 3,566 1,404 64.9% Contract liabilities - current 6,728 6,772 44 0.7% Contract liabilities - long-term 11,099 11,073 (26) (0.2)% 2021 2022 2023 2024 Significant Customers Customers exceeding ten percent of the consolidated Company’s net revenues The Company had no customers that exceeded ten percent of the Company’s net revenues from continuing operations for the years ended December 31, 2018, 2019 and 2020. The following MCC customers, which are included in discontinued operations, previously exceeded ten percent of the Company’s consolidated net revenues. The Company had contracts with the Commonwealth of Virginia (the “Virginia Contracts”). The Company began providing Medicaid managed long-term services and supports to enrollees in the Commonwealth Coordinated Care Plus (“CCC Plus”) program on August 1, 2017. On August 1, 2018, the Company began providing integrated healthcare services to Medicaid enrollees in the Commonwealth of Virginia under the Medallion 4.0/FAMIS Managed Care Program (“Medallion”). The Virginia Contracts generated net revenues of $476.7 million, $847.8 million and $1,013.2 million for the years ended December 31, 2018, 2019 and 2020, respectively. The Company had a contract with the State of New York (the “New York Contract”) to provide integrated managed care services to Medicaid and Medicare enrollees in the State of New York. The New York Contracts generated net revenues of $691.6 million, $836.4 million and $756.4 million for the years ended December 31, 2018, 2019 and 2020, respectively. The Company had contracts with the Commonwealth of Massachusetts and CMS (the “Massachusetts Contracts”) to provide integrated managed care services to Medicaid and Medicare enrollees in the Commonwealth of Massachusetts. Medicaid services are provided under a Senior Care Options contract (“SCO Contract”) began on January 1, 2016. The Massachusetts Contracts generated net revenues of $682.1 million, $718.9 million and $709.2 million for the years ended December 31, 2018, 2019 and 2020, respectively. Customers exceeding ten percent of segment net revenues In addition to the Massachusetts Contracts, New York Contract and Virginia Contracts previously discussed, the following customers generated in excess of ten percent of net revenues for the respective segment for the years ended December 31, 2018, 2019 and 2020 (in thousands): Segment Term Date 2018 2019 2020 Healthcare Customer A December 31, 2021 $ 308,649 $ 324,321 $ 344,988 Customer B December 31, 2022 169,508 * 199,036 * 198,199 Pharmacy Management Customer C March 31, 2024 344,479 335,682 358,236 * Revenue amount did not exceed 10 percent of net revenues for the respective segment for the year presented. Amount is shown for comparative purposes only. 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 $544.6 million, $537.8 million and $583.0 million for the years ended December 31, 2018, 2019 and 2020, respectively. Net revenues from members in relation to its contract with CMS in aggregate totaled $442.3 million, $287.6 million and $243.7 million for the years ended December 31, 2018, 2019 and 2020 respectively. Net revenues from contracts with various agencies and departments of the United States federal government in aggregate totaled $308.7 million, $299.2 million, and $273.0 million for the years ended December 31, 2018, 2019 and 2020, respectively. The Company’s contracts with customers typically have stated terms of one one Income Taxes The Company files a consolidated federal income tax return with its eighty-percent or more controlled subsidiaries. The Company and its subsidiaries also file income tax returns in various state and local jurisdictions. The Company estimates income taxes for each of the jurisdictions in which it operates. This process involves determining both permanent and temporary differences resulting from differing treatment for tax and book purposes. Deferred tax assets and/or liabilities are determined by multiplying the temporary differences between the financial reporting and tax reporting bases for assets and liabilities by the enacted tax rates expected to be in effect when such differences are recovered or settled. The Company then assesses the likelihood that the deferred tax assets will be recovered from the reversal of temporary differences, the implementation of feasible and prudent tax planning strategies, and future taxable income. To the extent the Company cannot conclude that recovery is more likely than not, it establishes a valuation allowance. The effect of a change in tax rates on deferred taxes is recognized in income in the period that includes the enactment date. Reversals of both valuation allowances and unrecognized tax benefits are recorded in the period they occur, typically as reductions to income tax expense. The Coronavirus Aid, Relief, and Economic Security Act was signed into law on March 27, 2020, and the Consolidated Appropriations Act, 2021 was signed into law on December 27, 2020. Both acts provide widespread emergency relief for the economy and aid to corporations including several significant provisions related to taxes. As of December 31, 2020, the Company has not utilized any of the provisions that would result in a material impact on its results. Health Care Reform 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. Book overdrafts are reflected within accounts payable on the balance sheets. At December 31, 2019, the Company had $0.5 million in book overdrafts. There were no book overdrafts at December 31, 2020. At December 31, 2020, the Company’s excess capital and undistributed earnings for the Company’s regulated subsidiaries of approximately $35 million are included in cash and cash equivalents. Restricted Assets The Company has certain assets which are considered restricted for: (i) the payment of claims under the terms of certain managed care contracts; (ii) regulatory purposes related to the payment of claims in certain jurisdictions; and (iii) the maintenance of minimum required tangible net equity levels for certain of the Company’s subsidiaries. Significant restricted assets of the Company as of December 31, 2019 and 2020 were as follows (in thousands): 2019 2020 Restricted cash and cash equivalents $ 51,253 $ 49,227 Restricted short-term investments 82,772 88,867 Restricted deposits (included in other current assets) 36,215 43,547 Restricted long-term investments 2,307 1,026 Total $ 172,547 $ 182,667 The Company’s equity in restricted net assets of consolidated subsidiaries represented approximately 9.3% of the Company’s consolidated stockholders’ equity as of December 31, 2020 and consisted of net assets of the Company which were restricted as to transfer to Magellan in the form of cash dividends, loans or advances under regulatory restrictions. 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 financial assets and liabilities that are required to be measured at fair value as of December 31, 2019 and 2020 (in thousands): December 31, 2019 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ — $ 111,085 $ — $ 111,085 Investments: U.S. Government and agency securities 30,775 — — 30,775 Corporate debt securities — 69,581 — 69,581 Certificates of deposit — 1,305 — 1,305 Total assets held at fair value $ 30,775 $ 181,971 $ — $ 212,746 December 31, 2020 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (2) $ — $ 679,554 $ — $ 679,554 Investments: U.S. Government and agency securities 42,399 — — 42,399 Corporate debt securities — 99,749 — 99,749 Certificates of deposit — 1,311 — 1,311 Total assets held at fair value $ 42,399 $ 780,614 $ — $ 823,013 (1) Excludes $4.7 million of cash held in bank accounts by the Company. (2) Excludes $464.9 million of cash held in bank accounts by the Company. For the years ended December 31, 2019 and 2020, the Company did not transfer any assets between fair value measurement levels. The carrying values of financial instruments, including accounts receivable and accounts payable, approximate their fair values due to their short-term maturities. The fair value of the Notes (as defined below) of $381.7 million as of December 31, 2020 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 $263.1 million as of December 31, 2020 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. Investments All of the Company’s investments are classified as “available-for-sale” and are carried at fair value. Securities which have been classified as Level 1 are measured using quoted market prices in active markets for identical assets or liabilities while those which have been classified as Level 2 are measured using quoted prices for identical assets and liabilities in markets that are not active. The Company’s policy is to classify all investments with contractual maturities within one year as current. Investment income is recognized when earned and reported net of investment expenses. Net unrealized holding gains or losses are excluded from earnings and are reported, net of tax, as “accumulated other comprehensive income (loss)” in the accompanying consolidated balance sheets and consolidated statements of comprehensive income until realized, unless the losses are deemed to be other-than-temporary. Realized gains or losses, including any provision for other-than-temporary declines in value, are included in the consolidated statements of income. 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. The credit component of an other-than-temporary impairment is determined by comparing the net present value of projected future cash flows with the amortized cost basis of the debt security. The net present value is calculated by discounting the best estimate of projected future cash flows at the effective interest rate implicit in the debt security at the date of acquisition. Cash flow estimates are driven by assumptions regarding probability of default, including changes in credit ratings, and estimates regarding timing and amount of recoveries associated with a default. Furthermore, unrealized losses entirely caused by non-credit related factors related to debt securities for which the Company expects to fully recover the amortized cost basis continue to be recognized in accumulated other comprehensive income. As of December 31, 2019 and 2020, there were no material unrealized losses that the Company believed to be other-than-temporary. No realized gains or losses were recorded for the years ended December 31, 2018, 2019, or 2020. The following is a summary of short-term and long-term investments at December 31, 2019 and 2020 (in thousands): December 31, 2019 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value U.S. Government and agency securities $ 30,742 $ 38 $ (5) $ 30,775 Corporate debt securities 69,552 40 (11) 69,581 Certificates of deposit 1,305 — — 1,305 Total investments at December 31, 2019 $ 101,599 $ 78 $ (16) $ 101,661 December 31, 2020 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value U.S. Government and agency securities $ 42,389 $ 11 $ (1) $ 42,399 Corporate debt securities 99,861 3 (115) 99,749 Certificates of deposit 1,311 — — 1,311 Total investments at December 31, 2020 $ 143,561 $ 14 $ (116) $ 143,459 The maturity dates of the Company’s investments as of December 31, 2020 are summarized below (in thousands): Amortized Estimated Cost Fair Value 2021 $ 140,950 $ 140,847 2022 2,611 2,612 Total investments at December 31, 2020 $ 143,561 $ 143,459 Concentration of Credit Risk Accounts receivable subjects the Company to a concentration of credit risk with third party payors that include health insurance companies, managed healthcare organizations, healthcare providers and governmental entities. The Company maintains cash and cash equivalents balances at financial institutions which are insured by the Federal Deposit Insurance Corporation (“FDIC”). At times, balances in certain bank accounts may exceed the FDIC insured limits. Pharmaceutical Inventory Pharmaceutical inventory consists solely of finished goods (primarily prescription drugs) and is stated at the lower of first-in first-out, cost, or market. Long-lived Assets Long-lived assets, including property and equipment and intangible assets to be held and used, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We group and evaluate these long-lived assets for impairment at the lowest level at which individual cash flows can be identified. Impairment is determined by comparing the carrying value of these long-lived assets to management’s best estimate of the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. The cash flow projections used to make this assessment are consistent with the cash flow projections that management uses internally in making key decisions. In the event an impairment exists, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the asset, which is generally determined by using quoted market prices or the discounted present value of expected future cash flows. In the evaluation of indefinite-lived intangible assets for impairment, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying value. If the Company determines that it is not more likely than not for the indefinite-lived intangible asset’s fair value to be less than its carrying value, a calculation of the fair value is not performed. If the Company determines that it is more likely than not that the indefinite-lived intangible asset’s fair value is less than its carrying value, a calculation is performed and compared to the carrying value of the asset. If the carrying amount of the indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The Company measures the fair value of its indefinite-lived intangible assets using the “relief from royalty” method. Significant estimates in this approach include projected revenues and royalty and discount rates for each trade name evaluated. Property and Equipment Property and equipment is stated at cost, except for assets that have been impaired, for which the carrying amount has been reduced to estimated fair value. Expenditures for renewals and improvements are capitalized to the property accounts. Replacements and maintenance and repairs that do not improve or extend the life of the respective assets are expensed as incurred. The Company capitalizes costs incurred to develop internal-use software during the application development stage. Capitalization of software development costs occurs after the preliminary project stage is complete, management authorizes the project, and it is probable that the project will be |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2020 | |
Acquisitions | |
Acquisitions | 3. Acquisitions Acquisition of Aurelia Health, LLC percent of the outstanding membership interests of Aurelia Health, LLC and its subsidiary Michael B. Bayless, LLC (collectively “Bayless”) (the “Bayless Acquisition”). two The estimated fair value of Bayless’ assets acquired and liabilities assumed at the date of the acquisition are summarized as follows (in thousands): Assets acquired: Current assets (includes $330 and $7,189 of cash and accounts receivable, respectively) $ 9,974 Property and equipment, net 699 Other assets 3,182 Identified intangible assets 38,011 Goodwill 67,358 Total assets acquired 119,224 Liabilities assumed: Current liabilities 1,825 Other liabilities 4,294 Total liabilities assumed 6,119 Net assets acquired 113,105 Redeemable non-controlling interest 33,006 Total Consideration $ 80,099 |
Benefit Plans
Benefit Plans | 12 Months Ended |
Dec. 31, 2020 | |
Benefit Plans | |
Benefit Plans | 4. Benefit Plans The Company has a defined contribution retirement plan (the “401(k) Plan”). Employee participants can elect to contribute up to 75 percent of their compensation, subject to Internal Revenue Service (“IRS”) deferral limitations. The Company makes contributions to the 401(k) Plan based on employee compensation and contributions. The Company matches 50 percent of each employee’s contribution up to 6 percent of their annual compensation. The Company recognized $14.9 million, $15.2 million and $18.1 million of expense for the years ended December 31, 2018, 2019 and 2020, respectively, for matching contributions to the 401(k) Plan. |
Long Term Debt, Capital Lease a
Long Term Debt, Capital Lease and Deferred Financing Obligations | 12 Months Ended |
Dec. 31, 2020 | |
Long Term Debt, Capital Lease and Deferred Financing Obligations | |
Long Term Debt, Capital Lease and Deferred Financing Obligations | 5. Long-Term Debt, Finance Lease and Deferred Financing Obligations Senior Notes 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 interest rate on the Notes on December 31, 2020 was 4.900%. 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”). On August 13, 2018, the Company entered into an amendment to the 2017 Credit Agreement, which extended the maturity date by one year. On February 27, 2019, the Company entered into a second amendment to the 2017 Credit Agreement, which amended the total leverage ratio covenant, and which was necessary in order for the Company to remain in compliance with the terms of the 2017 Credit Agreement. The 2017 Credit Agreement is scheduled to mature on September 22, 2023. 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 As of December 31, 2020, the contractual maturities of the term loan facility under the 2017 Credit Agreement were as follows: 2021 - The 2017 Credit Agreement contains covenants that limit management’s discretion in operating the Company’s business by restricting or limiting the Company’s ability, among other things, to: ● incur or guarantee additional indebtedness or issue preferred or redeemable stock; ● pay dividends and make other distributions; ● repurchase equity interests; ● make certain advances, investments and loans; ● enter into sale and leaseback transactions; ● create liens; ● sell and otherwise dispose of assets; ● acquire or merge or consolidate with another company; and ● enter into some types of transactions with affiliates. Letter of Credit Agreement Finance Lease and Deferred Financing Obligations There were $18.1 million and $16.4 million of finance lease and deferred financing obligations at December 31, 2019 and December 31, 2020, respectively. The Company’s finance lease and deferred financing 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. The recorded gross cost of finance leased assets was $53.8 million and $43.0 million at December 31, 2019 and 2020, respectively. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity | |
Stockholders' Equity | 6. Stockholders’ Equity Stock Compensation At December 31, 2019 and 2020, the Company had equity-based employee incentive plans. Prior to May 18, 2016, the Company utilized the 2011 Management Incentive Plan (the “2011 MIP”), 2008 Management Incentive Plan (the “2008 MIP”) and 2006 Directors’ Equity Compensation Plan (collectively the “Preexisting Plans”) for grants of stock options, RSAs, RSUs, and stock appreciation rights, to provide incentives to officers, employees and non-employee directors. On February 25, 2016, the board of directors of the Company approved the 2016 Management Incentive Plan (“2016 MIP”), and the 2016 MIP was approved by the Company’s shareholders at the 2016 Annual Meeting of Shareholders on May 18, 2016. The 2016 MIP provides for the delivery of up to a number of shares equal to (i) 4,000,000 shares of common stock, plus (ii) the number of shares subject to outstanding awards under the 2011 MIP and Preexisting Plans which become available after shareholder approval of the 2016 MIP as a result of forfeitures, expirations, and in other permitted ways under the share recapture provisions of the 2016 MIP. Delivery of shares under “full-value” awards (awards other than options or stock appreciation rights) will be counted for each share delivered as 1.60 shares against the total number of shares reserved under the 2016 MIP. The 2016 MIP provides for awards of stock options, RSAs, RSUs, performance-based restricted stock units (“PSUs”), stock appreciation rights, cash-denominated awards and any combination of the foregoing. A RSU is a notional account representing the right to receive a share of the Company’s Common Stock (or, at the Company’s option, cash in lieu thereof) at some future date. In general, stock options vest ratably on each anniversary over the three years subsequent to grant, and have a ten year life. In general, RSUs vest ratably on each anniversary over the three years subsequent to grant. The PSUs vest over three years and are subject to market-based conditions. At December 31, 2020, 2,058,875 shares of the Company’s common stock remain available for future grant under the Company’s 2016 MIP. On February 27, 2014 the board of directors of the Company approved the 2014 Employee Stock Purchase Plan (“2014 ESPP”), and the 2014 ESPP was approved by the Company’s shareholders at the 2014 Annual Meeting of Shareholders on May 21, 2014. The 2014 ESPP provides for up to 200,000 shares of the Company’s common stock, plus the number of shares remaining under the 2011 Employee Stock Purchase Plan, to be issued. On May 24, 2018, the Company’s shareholders approved an amendment to the 2014 ESPP to increase by 300,000 the number of shares available for issuance under the plan. During the years ended December 31, 2019 and 2020, 93,632 and 64,011 shares of the Company’s common stock were issued under the employee stock purchase plans, respectively. At December 31, 2020, 151,073 shares of the Company’s common stock remain available for future grant under the Company’s 2014 ESPP. Stock Options Summarized information related to the Company’s stock options for the years ended December 31, 2018, 2019 and 2020 is as follows: 2018 2019 Weighted Weighted Average Average Exercise Exercise Options Price Options Price Outstanding, beginning of period 2,458,237 $ 61.50 2,352,609 $ 68.10 Granted 477,956 96.39 429,124 66.22 Forfeited (174,376) 80.21 (112,120) 78.18 Exercised (409,208) 56.36 (543,752) 60.16 Outstanding, end of period 2,352,609 68.10 2,125,861 69.22 2020 Weighted Average Weighted Remaining Aggregate Average Contractual Intrinsic Exercise Term Value Options Price (in years) (in thousands) Outstanding, beginning of period 2,125,861 $ 69.22 Granted 63,771 62.93 Forfeited (102,163) 75.63 Exercised (1,042,186) 61.92 Outstanding, end of period 1,045,283 $ 75.48 4.55 $ 12,984 Vested and expected to vest at end of period 1,042,443 $ 75.51 4.54 $ 12,936 Exercisable, end of period 841,892 $ 76.41 3.65 $ 10,131 The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (based upon the difference between the Company’s closing stock price on the last trading day of 2020 of $82.84 and the exercise price) for all in-the-money options as of December 31, 2020. This amount changes based on the fair market value of the Company’s common stock. The total pre-tax intrinsic value of options exercised during the years ended December 31, 2018, 2019 and 2020 was $17.3 million, $5.6 million and $11.8 million, respectively. The weighted average grant date fair value per share of substantially all stock options granted during the years ended December 31, 2018, 2019 and 2020 was $25.34, $20.64 and $18.55 respectively, as estimated using the Black-Scholes-Merton option pricing model based on the following weighted average assumptions: 2018 2019 2020 Risk-free interest rate 2.54 % 2.50 % 1.06 % Expected life 4 years 4 years 4 years Expected volatility 28.20 % 35.56 % 35.56 % Expected dividend yield 0.00 % 0.00 % 0.00 % For the years ended December 31, 2018, 2019 and 2020, expected volatility was based on the historical volatility of the Company’s stock price. In the year ended December 31, 2018, the tax benefit from excess tax deductions included in continuing operations was $5.1 million; tax deficiencies were insignificant. In the year ended December 31, 2019, the net tax expense from tax deficiencies included in continuing operations was $1.5 million, which consisted of $1.8 million of tax deficiencies offset by $0.3 million of excess tax deductions. In the year ended December 31, 2020, the net tax expense from tax deficiencies included in continuing operations was $2.3 million, which consisted of $2.7 million of tax deficiencies offset by $0.4 million of excess tax deductions. The tax impact for discontinued operations was insignificant. Restricted Stock Awards Summarized information related to the Company’s nonvested RSAs for the years ended December 31, 2018, 2019 and 2020 is as follows: 2018 2019 2020 Weighted Weighted Weighted Average Average Average Grant Date Grant Date Grant Date Shares Fair Value Shares Fair Value Shares Fair Value Outstanding, beginning of period 31,102 $ 68.00 11,795 $ 89.05 39,761 $ 65.40 Awarded 11,795 89.05 41,905 65.60 54,314 76.72 Vested (31,102) 68.00 (13,939) 85.99 (39,761) 65.40 Forfeited — — — — — — Outstanding, ending of period 11,795 89.05 39,761 65.40 54,314 76.72 As of December 31, 2020, there was $3.5 million of unrecognized stock compensation expense related to nonvested restricted stock awards. This cost is expected to be recognized over a weighted average period of 2.57 years. Restricted Stock Units Summarized information related to the Company’s nonvested RSUs for the years ended December 31, 2018, 2019 and 2020 is as follows: 2018 2019 2020 Weighted Weighted Weighted Average Average Average Grant Date Grant Date Grant Date Shares Fair Value Shares Fair Value Shares Fair Value Outstanding, beginning of period 163,289 $ 66.46 156,750 $ 86.68 256,430 $ 74.12 Awarded 111,033 99.29 212,065 67.92 355,689 62.48 Vested (84,627) 65.20 (68,993) 81.95 (108,996) 75.15 Forfeited (32,945) 84.17 (43,392) 76.71 (74,761) 64.79 Outstanding, ending of period 156,750 86.68 256,430 74.12 428,362 65.83 As of December 31, 2020, there was $18.3 million of unrecognized stock compensation expense related to nonvested restricted stock units. This cost is expected to be recognized over a weighted average period of 1.97 years. Performance-Based Restricted Stock Units Summarized information related to the Company’s nonvested PSUs for the years ended December 31, 2018, 2019 and 2020 is as follows: 2018 2019 2020 Weighted Weighted Weighted Average Average Average Grant Date Grant Date Grant Date Shares Fair Value Shares Fair Value Shares Fair Value Outstanding, beginning of period 202,315 $ 84.63 209,019 $ 103.38 248,559 $ 104.27 Awarded 80,502 141.61 101,498 101.82 138,114 76.88 Vested (33,592) 85.0 (43,109) 97.12 (52,861) 76.24 Forfeited (40,206) 100.96 (18,849) 97.49 (54,867) 85.09 Outstanding, end of period 209,019 103.38 248,559 104.27 278,945 99.80 The PSUs will entitle the grantee to receive a number of shares of the Company’s Common Stock determined over a three-year performance period ending on December 31 of the year prior to the settlement date of the awards, provided the grantee remains in the service of the Company on the settlement date. The Company expenses the cost of PSU awards ratably over the requisite service period. The number of shares for which the PSUs will be settled will be a percentage of shares for which the award is targeted and will depend on the Company’s total shareholder return (as defined below), expressed as a percentile ranking of the Company’s total shareholder return as compared to the Company’s peer group (as defined below). The number of shares for which the PSUs will be settled vary from zero to 200 percent of the shares specified in the grant. Total shareholder return is determined by dividing the average share value of the Company’s Common Stock over the 30 trading days preceding January 1 of the year the awards are scheduled to vest by the average share value of the Company’s Common Stock over the 30 trading days beginning on January 1 of the year the awards were granted, with a deemed reinvestment of any dividends declared during the performance period. The Company’s peer group includes companies which comprise the S&P Health Care Services Industry Index, selected by the Compensation Committee of the Company’s Board of Directors and includes a range of healthcare companies operating in several business segments. The weighted average estimated fair value of the PSUs granted in the year ended December 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 weighted average estimated fair value of the PSUs granted in the year ended December 31, 2019 was $101.82, 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 2.35%, and expected volatility of 58% to 82% (average of 78%). The weighted average estimated fair value of the PSUs granted in the year ended December 31, 2020 was $76.88, 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 0.68%, and expected volatility of 20% to 70% (average of 35%). As of December 31, 2020, there was Net Income per Common Share Attributable to Magellan The following table reconciles income (numerator) and shares (denominator) used in the Company’s computations of net income per share for the years ended December 31, 2018, 2019 and 2020 (in thousands, except per share data): 2018 2019 2020 Numerator: Net income from continuing operations $ 22,176 $ 12,597 $ 4,046 Income from discontinued operations, net of tax 2,005 43,305 378,289 Net income $ 24,181 $ 55,902 $ 382,335 Denominator: Weighted average number of common shares outstanding—basic 24,349 24,243 25,255 Common stock equivalents—stock options 493 142 79 Common stock equivalents—RSAs 15 8 18 Common stock equivalents—RSUs 37 35 104 Common stock equivalents—PSUs 137 131 72 Common stock equivalents—employee stock purchase plan 4 4 4 Weighted average number of common shares outstanding—diluted 25,035 24,563 25,532 Net income per common share—basic: Continuing operations $ 0.91 $ 0.52 $ 0.16 Discontinued operations 0.08 1.79 14.98 Consolidated operations $ 0.99 $ 2.31 $ 15.14 Net income per common share—diluted: Continuing operations $ 0.89 $ 0.51 $ 0.16 Discontinued operations 0.08 1.76 14.82 Consolidated operations $ 0.97 $ 2.27 $ 14.98 The weighted average number of common shares outstanding for the years ended December 31, 2018, 2019 and 2020 was 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 years ended December 31, 2018, 2019 and 2020 represent stock options to purchase shares of the Company’s common stock, restricted stock awards, restricted stock units and stock purchased under the 2014 ESPP. For the years ended December 31, 2018, 2019 and 2020, the Company had additional potential dilutive securities outstanding representing 0.5 million, 1.0 million and 0.7 million options, respectively, that were not included in the computation of dilutive securities because they were anti-dilutive for such periods. Had these shares not been anti-dilutive, all of these shares would not have been included in the net income per common share calculation, as the Company uses the treasury stock method of calculating diluted shares. Stock Repurchases The Company’s board of directors has previously authorized a series of stock repurchase plans. Stock repurchases for each such plan could be executed through open market repurchases, privately negotiated transactions, accelerated share repurchases or other means. The board of directors authorized management to execute stock repurchase transactions from time to time and in such amounts and via such methods as management deemed appropriate. Each stock repurchase program could be limited or terminated at any time without prior notice. Pursuant to the terms of the Merger Agreement the Company suspended its stock repurchase programs on January 4, 2021, the date we announced our planned merger with Centene. The Company’s board of directors approved, and subsequently amended, a stock repurchase plan which authorizes the Company to purchase up to $400 million of its outstanding common stock through November 15, 2021. As of December 31, 2020, the remaining capacity under the Repurchase Program was $186.3 million. 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 this 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 January 1, 2018 - December 31, 2018 844,872 74.59 63.0 January 1, 2019 - December 31, 2019 60,901 61.15 3.7 January 1, 2020 - December 31, 2020 — — — 3,359,140 $ 213.7 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Taxes | |
Income Taxes | 7. Income Taxes Income Tax Expense The components of income tax expense (benefit) in continuing operations for the following years ended December 31 were as follows (in thousands): 2018 2019 2020 Income taxes currently payable: Federal $ 8,918 $ 2,051 $ (31,567) State 3,241 27 (5,238) 12,159 2,078 (36,805) Deferred income taxes (benefits): Federal (912) 5,378 (5,903) State 210 1,706 (1,823) (702) 7,084 (7,726) Total income tax expense (benefit) $ 11,457 $ 9,162 $ (44,531) 2018 2019 2020 Income tax expense (benefit) at federal statutory rate $ 7,063 $ 4,569 $ (8,501) State income taxes (benefit), net of federal income tax benefit 3,407 1,285 (1,632) State contingencies added 2,287 944 1,519 Tax contingencies reversed due to statute closings (2,500) (2,860) (1,762) Change in valuation allowances (691) 584 (924) Share-based compensation (4,750) 1,715 2,982 Qualified research credit (1,584) (1,418) (2,424) Non-deductible executive compensation 3,052 3,153 2,717 Non-deductible HIF fees 3,236 — 3,263 Sale of MCC Business — — (39,819) Other-net 1,937 1,190 50 Total income tax expense $ 11,457 $ 9,162 $ (44,531) Deferred Income Taxes The significant components of deferred tax assets and liabilities at December 31 were as follows (in thousands): 2019 2020 Deferred tax assets: Net operating loss carryforwards $ 3,824 $ 3,760 Share-based compensation 9,167 4,365 Other accrued compensation 10,697 17,037 Claims reserves 5,355 2,241 Deferred revenue 4,122 4,491 Accrued severance 1,244 3,505 Other non-deductible accrued liabilities 1,210 1,224 Indirect tax benefits 1,867 2,247 Operating lease--right-of-use liabilities 18,603 13,564 Other deferred tax assets 111 1,962 Total deferred tax assets 56,200 54,396 Valuation allowances (1,828) (905) Deferred tax assets after valuation allowances 54,372 53,491 Deferred tax liabilities: Depreciation (20,479) (29,967) Amortization of goodwill and intangible assets (12,569) (15,670) Operating lease--right-of-use assets (15,893) (7,091) Other deferred tax liabilities (5,562) (6,023) Total deferred tax liabilities (54,503) (58,751) Net deferred tax liabilities from continued operations $ (131) $ (5,260) As a result of the MCC Sale, $13.4 million of the Company’s state and local net operating loss carryforwards (“NOLs”) and all of its remaining $1.3 million of federal NOLs were assumed by Molina and therefore the related deferred tax assets were reversed against continuing operations income tax expense in 2020. The Company and its subsidiaries have $75.0 million of NOLs available to reduce state and local taxable income at certain subsidiaries in 2021 and subsequent years. Most of these NOLs will expire in 2021 through 2039 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. Other than those considered in determining the valuation allowances discussed below, 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. Other than deferred tax benefits attributable to operating loss carryforwards, there are no time constraints within which the Company’s deferred tax assets must be realized. Future changes in the estimated realizability of deferred tax assets could materially affect the Company’s financial condition and results of operations. Uncertain Tax Positions A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands): 2018 2019 2020 Balance as of beginning of period $ 10,411 $ 10,823 $ 9,010 Additions for current year tax positions 2,925 1,180 3,316 Additions for tax positions of prior years 397 699 29 Reductions for tax positions of prior years (44) (472) (85) Reductions due to lapses of applicable statutes of limitations (2,906) (3,177) (1,826) Changes due to Tax Act 339 — — Reductions due to settlements with taxing authorities (299) (43) — Balance as of end of period $ 10,823 $ 9,010 $ 10,444 If these unrecognized tax benefits had been realized as of December 31, 2019 and 2020, $7.6 million and $6.2 million, respectively, would have reduced income tax expense from continuing operations. The Company continually performs a comprehensive review of its tax positions and accrues amounts for tax contingencies related to uncertain tax positions. Based upon these reviews, the status of ongoing tax audits and the expiration of applicable statutes of limitations, accruals are adjusted as necessary. The tax benefit from an uncertain tax position is recognized when it is more likely than not that, based on the technical merits, the position will be sustained upon examination, including resolution of any related appeals or litigation processes. The Company also adjusts these liabilities for unrecognized tax benefits when its judgment changes as a result of the evaluation of new information not previously available. However, the ultimate resolution of a disputed tax position following an examination by a taxing authority could result in a payment that is materially different from that accrued by the Company. These differences are typically reflected as increases or decreases to income tax expense in the period in which they are determined. The statutes of limitations regarding the assessment of federal and most state and local income taxes for 2016 expired during 2020. As a result, $1.8 million of tax contingency reserves recorded as of December 31, 2019 were reversed in 2020, of which $1.4 million was reflected as a reduction to income tax expense continuing operations and $0.4 million as a decrease to deferred tax assets. Additionally, $0.1 million of accrued interest was reversed in 2020 and reflected as a reduction to income tax expense from continuing operations due to the closing of statutes of limitations on tax assessments. The statutes of limitations regarding the assessment of federal and most state and local income taxes for 2015 expired during 2019. As a result, $3.2 million of tax contingency reserves recorded as of December 31, 2018 were reversed in 2019, of which $2.5 million was reflected as a reduction to income tax expense from continuing operations and $0.7 million as a decrease to deferred tax assets. Additionally, $0.3 million of accrued interest was reversed in 2019 and reflected as a reduction to income tax expense from continuing operations due to the closing of statutes of limitations on tax assessments. The statutes of limitations regarding the assessment of federal and most state and local income taxes for 2014 expired during 2018. As a result, $2.9 million of tax contingency reserves recorded as of December 31, 2017 were reversed in 2018, of which $2.3 million was reflected as a reduction to income tax expense from continuing operations and $0.6 million as a decrease to deferred tax assets. Additionally, $0.2 million of accrued interest was reversed in 2018 and reflected as a reduction to income tax expense from continuing operations due to the closing of statutes of limitations on tax assessments. With few exceptions, the Company is no longer subject to income tax assessments by tax authorities for years ended prior to 2017. Further, it is reasonably possible the statutes of limitations regarding the assessment of federal and most state and local income taxes for 2017 could expire during 2021. Up to $1.3 million of unrecognized tax benefits recorded as of December 31, 2020 could be reversed during 2021 as a result of statute expirations, of which $1.1 million would be reflected as a reduction to income tax expense and $0.2 million as a decrease to deferred tax assets. All reversals from statute expirations would be reflected as discrete adjustments during the quarter in which the respective event occurs. As of December 31, 2019 and 2020, the Company had accrued approximately $0.3 million and $0.3 million, respectively, for the potential payment of interest and penalties. The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes. During the years ended December 31, 2018, 2019 and 2020, the Company recorded approximately $0.1 million, $0.1 million and $0.0 million, respectively, in interest and penalties. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 12 Months Ended |
Dec. 31, 2020 | |
Supplemental Cash Flow Information | |
Supplemental Cash Flow Information | 8. Supplemental Cash Flow Information Supplemental cash flow information for the years ended December 31, 2018, 2019 and 2020 is as follows (in thousands): 2018 2019 2020 Income taxes paid, net of refunds $ 40,179 $ 4,774 $ 49,197 Interest paid $ 34,223 $ 29,892 $ 29,840 Assets acquired through finance leases and deferred financing $ 20,576 $ 3,302 $ 3,599 |
Discontinued Operations
Discontinued Operations | 12 Months Ended |
Dec. 31, 2020 | |
Discontinued Operations | |
Discontinued Operations | 9. Discontinued Operations Magellan Complete Care – Stock and Asset Purchase Agreement As discussed in Note 1— “General”, on December 31, 2020, the Company completed the sale of its MCC Business to Molina, pursuant to a Stock and Asset Purchase Agreement, dated as of April 30, 2020, by and between the Company and Molina, for cash in the amount of $850 million plus closing adjustments of $158 million (subject to post-closing adjustments, if any), and the assumption by Molina of liabilities of the MCC Business. In connection with the MCC Sale, the Company and Molina are entering into commercial agreements for certain behavioral health, utilization management and related services to be provided by the Company to Molina and the MCC business. In addition, the parties will enter into a transition services agreement pursuant to which the Company and certain of its affiliates will provide, or cause third parties to provide, certain services to accommodate the transition of the MCC business to Molina. The foregoing description of the Purchase Agreement and the MCC Sale does not purport to be complete and is qualified in its entirety by the terms and conditions of the Purchase Agreement, which was filed as Exhibit 2.1 to the Company’s Quarterly Report on Form 10-Q which was filed with the SEC on May 11, 2020, and any related agreements. The accounting requirements for reporting a business to be divested as a discontinued operation were met during the second quarter of 2020. Accordingly, the accompanying consolidated financial statements for all periods presented reflect the MCC business as a discontinued operation. The following table summarizes the major classes of assets and liabilities held for sale that were included in the Company’s consolidated balance sheets as of December 31, 2019 (in thousands): December 31, 2019 Assets Held For Sale Cash and cash equivalents ($95,202 restricted) $ 209,497 Accounts receivable, net 209,496 Short-term and long-term investments ($243,496 restricted) 243,496 Property and equipment, net 6,710 Goodwill 211,735 Other intangible assets, net 85,669 Other current and long-term assets ($2,387 restricted) 32,386 Total Assets Held For Sale 998,989 Less: current portion 663,276 Total Assets Held For Sale, Less Current Portion $ 335,713 Liabilities Held For Sale Accounts payable $ 4,625 Accrued liabilities 92,170 Medical claims payable 281,419 Other medical liabilities 31,769 Deferred income taxes 15,063 Tax contingencies 5,388 Deferred credits and other long-term liabilities 16,850 Total Liabilities Held For Sale 447,284 Less: current portion 409,983 Total Liabilities Held For Sale, Less Current Portion $ 37,301 The following table summarizes the components of income from discontinued operations that is included in the Company’s consolidated income statements for the years ended December 31, 2018, 2019 and 2020 (in thousands): Year Ended December 31, 2018 2019 2020 Managed care and other revenue $ 2,529,386 $ 2,757,511 $ 2,924,014 Costs and expenses: Cost of care 2,207,721 2,397,007 2,377,847 Direct service costs and other operating expenses (1)(2)(3) 300,696 292,351 360,783 Depreciation and amortization 20,376 21,142 20,358 Interest expense 216 285 89 Interest and other income (9,184) (12,332) (5,464) Gain on sale — — (348,145) Total costs and expenses 2,519,825 2,698,453 2,405,468 Income from discontinued operation before income taxes 9,561 59,058 518,546 Provision for income taxes 7,556 15,753 140,257 Net income from discontinued operations $ 2,005 $ 43,305 $ 378,289 (1) Includes stock compensation expense of $536, $828 and $278 for the years ended December 31, 2018, 2019 and 2020 respectively. (2) Includes changes in fair value of contingent consideration of $199 and $(2,124) for the years ended December 31, 2018 and 2019, respectively. (3) Includes divestiture related expenses of $9,379 for the year ended December 31, 2020. The Company has retained corporate overhead expenses previously allocated to MCC of $35.1 million, $33.6 million and $30.4 million for the years ended December 31, 2018, 2019 and 2020, respectively. |
Special Charges
Special Charges | 12 Months Ended |
Dec. 31, 2020 | |
Special Charges | |
Special Charges | 10. Special Charges The following table summarizes the components of special charges that are included in the Company’s consolidated income statements for the year ended December 31, 2020 (in thousands): Year Ended December 31, 2020 Non-cash related special charges Right-of-use assets $ 7,051 Fixed assets 15,081 Total non-cash related special charges 22,132 Cash related special charges Employee severance and termination benefits 11,330 Lease shutdown costs 616 Total cash related special charges 11,946 Total special charges $ 34,078 Balance Balance December 31, December 31, 2019 Additions Payments 2020 Employee severance and termination benefits $ — $ 11,330 $ (347) $ 10,983 Lease shutdown costs — 616 (6) 610 $ — $ 11,946 $ (353) $ 11,593 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | 11. Commitments and Contingencies Insurance The Company maintains a program of insurance coverage for a broad range of risks in its business. The Company has renewed its general, professional and managed care liability insurance policies with unaffiliated insurers for a one-year The Company maintains a separate general and professional liability insurance policy with an unaffiliated insurer for its specialty pharmaceutical dispensing operations. The specialty pharmaceutical dispensing operations insurance policy has a one-year The Company is responsible for claims within its self-insured retentions, and for portions of claims reported after the expiration date of the policies if they are not renewed, or if policy limits are exceeded. The Company also purchases excess liability coverage in an amount that management believes to be reasonable for the size and profile of the organization. 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. The Company’s wholly owned subsidiary, Armed Forces Services Corporation (“AFSC”), conducts business with federal agency customers and federal contractors to such agencies. The Company investigated, 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 reported findings to the SBA and the Department of Defense, 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. The Company voluntarily responded to government requests for further information regarding the Company’s investigation. As a result of the Company's disclosure and the ensuing government investigation, a former AFSC executive pleaded guilty in the United States District Court for the Eastern District of Virginia to one count of honest services fraud, and at sentencing in September 2020, the Court ordered the former AFSC executive to pay restitution to AFSC as the victim of that offense. In June 2020, the United States Attorney’s Office for the Eastern District of Virginia (“U.S. Attorney’s Office”) informed the Company of a civil investigation regarding the Company and AFSC related to potential violations of the False Claims Act and/or the Anti-Kickback Act also stemming from the matters self-disclosed by the Company. 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 Company or AFSC be held responsible for the reported conduct in a proceeding initiated by the U.S. Attorney’s Office, SBA, Department of Defense and/or other federal agencies, we may be required to pay damages and/or penalties and AFSC could be suspended or debarred from government contracting. Management believes that the resolution of such investigations 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. AFSC generated approximately 3.0% and 2.4% of the Company’s total revenue from continuing operations for the years ended December 31, 2019 and 2020, respectively. 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. Leases The Company leases certain office space, distribution centers, land and equipment. These leases expire at various dates through August 2029. See Note 2—“Summary of Significant Accounting Policies—Leases” for a discussion of the Company’s leases. |
Business Segment Information
Business Segment Information | 12 Months Ended |
Dec. 31, 2020 | |
Business Segment Information | |
Business Segment Information | 12. Business Segment Information The accounting policies of the Company’s segments are the same as those described in Note 2—“Summary of Significant Accounting Policies.” 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 1—“General.” The following tables summarize, for the periods indicated, operating results by business segment for the years ended December 31, 2018, 2019 and 2020 (in thousands): Corporate Pharmacy and Healthcare Management Elimination Consolidated Year Ended December 31, 2018 Managed care and other revenue $ 2,110,756 $ 240,427 $ (607) $ 2,350,576 PBM and dispensing revenue — 2,625,417 (18,471) 2,606,946 Cost of care (1,554,691) — — (1,554,691) Cost of goods sold — (2,468,170) 15,467 (2,452,703) Direct service costs and other (401,083) (298,713) (74,119) (773,915) Stock compensation expense (1) 6,446 5,458 17,032 28,936 Changes in fair value of contingent consideration (1) 1,108 — — 1,108 Segment profit (loss) $ 162,536 $ 104,419 $ (60,698) $ 206,257 Identifiable assets by business segment (2) Restricted cash $ 52,681 $ 576 $ 2,954 $ 56,211 Net accounts receivable 192,239 465,345 150 657,734 Investments 91,841 7,037 — 98,878 Pharmaceutical inventory — 40,818 — 40,818 Goodwill 410,869 395,552 — 806,421 Other intangible assets, net 32,893 82,072 13,167 128,132 Corporate Pharmacy and Healthcare Management Elimination Consolidated Year Ended December 31, 2019 Managed care and other revenue $ 2,082,088 $ 265,439 $ (592) $ 2,346,935 PBM revenue — 2,236,829 (18,151) 2,218,678 Cost of care (1,543,524) — — (1,543,524) Cost of goods sold — (2,076,509) 17,224 (2,059,285) Direct service costs and other (402,006) (323,162) (76,499) (801,667) Stock compensation expense (1) 7,639 7,834 9,200 24,673 Segment Profit (Loss) $ 144,197 $ 110,431 $ (68,818) $ 185,810 Identifiable assets by business segment (2) Restricted cash $ 49,027 $ 2,226 $ — $ 51,253 Net accounts receivable 201,462 478,627 480 680,569 Investments 94,943 6,718 — 101,661 Pharmaceutical inventory — 44,962 — 44,962 Goodwill 410,869 395,552 — 806,421 Other intangible assets, net 20,059 61,536 80 81,675 Corporate Pharmacy and Healthcare Management Elimination Consolidated Year Ended December 31, 2020 Managed care and other revenue $ 1,959,869 $ 290,855 $ (703) $ 2,250,021 PBM revenue — 2,347,446 (19,936) 2,327,510 Cost of care (1,397,855) — — (1,397,855) Cost of goods sold — (2,199,674) 18,957 (2,180,717) Direct service costs and other (433,723) (360,970) (85,475) (880,168) Stock compensation expense (1) 6,876 7,723 10,573 25,172 Segment Profit (Loss) $ 135,167 $ 85,380 $ (76,584) $ 143,963 Identifiable assets by business segment (2) Restricted cash $ 33,381 $ 12,658 $ 3,188 $ 49,227 Net accounts receivable 229,250 509,086 5,166 743,502 Investments 136,243 7,216 — 143,459 Pharmaceutical inventory — 43,334 — 43,334 Goodwill 478,227 395,552 — 873,779 Other intangible assets, net 39,446 40,243 — 79,689 (1) Stock compensation expense, changes in the fair value of contingent consideration recorded in relation to the 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) Identifiable assets by business segment are those assets that are used in the operations of each segment. The remainder of the Company’s assets cannot be specifically identified by segment. The following table reconciles consolidated income before income taxes to Segment Profit for the years ended December 31, 2018, 2019 and 2020 (in thousands): 2018 2019 2020 Income (loss) from continuing operations before income taxes $ 33,633 $ 21,759 $ (40,485) Stock compensation expense 28,936 24,673 25,172 Changes in fair value of contingent consideration 1,108 — — Depreciation and amortization 112,284 110,367 98,387 Interest expense 35,180 35,868 30,865 Interest and other income (4,884) (6,857) (4,054) Special charges — — 34,078 Segment Profit from continuing operations $ 206,257 $ 185,810 $ 143,963 |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2020 | |
Selected Quarterly Financial Data (Unaudited) | |
Selected Quarterly Financial Data (Unaudited) | 13. Selected Quarterly Financial Data (Unaudited) The following is a summary of the unaudited quarterly results of operations for the years ended December 31, 2019 and 2020 (in thousands, except per share amounts): For the Quarter Ended March 31, June 30, September 30, December 31, 2019 2019 2019 2019 Year Ended December 31, 2019 Net revenue: Managed care and other $ 566,548 $ 608,614 $ 591,229 $ 580,544 PBM and dispensing 552,458 545,675 567,314 553,231 Total net revenue 1,119,006 1,154,289 1,158,543 1,133,775 Costs and expenses: Cost of care 369,097 408,911 397,697 367,819 Cost of goods sold 526,314 501,081 523,973 507,917 Direct service costs and other operating expenses (1) 202,300 195,907 195,844 207,616 Depreciation and amortization 25,417 28,191 28,890 27,869 Interest expense 9,037 9,070 8,935 8,826 Interest and other income (1,759) (1,821) (1,699) (1,578) Special charges — — — — Total costs and expenses 1,130,406 1,141,339 1,153,640 1,118,469 Income (loss) from continuing operations before income taxes (11,400) 12,950 4,903 15,306 Provision (benefit) for income taxes (3,209) 5,735 782 5,854 Net income (loss) from continuing operations (8,191) 7,215 4,121 9,452 Income from discontinued operations, net of tax 8,622 6,398 17,153 11,132 Net Income $ 431 $ 13,613 $ 21,274 $ 20,584 Weighted average number of common shares outstanding—basic 23,946 24,101 24,426 24,491 Weighted average number of common shares outstanding—diluted 24,213 24,416 24,708 24,905 Net income (loss) per common share—basic: Continuing operations $ (0.34) $ 0.30 $ 0.17 $ 0.39 Discontinued operations 0.36 0.26 0.70 0.45 Consolidated operations $ 0.02 $ 0.56 $ 0.87 $ 0.84 Net income (loss) per common share—diluted: Continuing operations $ (0.34) $ 0.30 $ 0.17 $ 0.38 Discontinued operations 0.36 0.26 0.69 0.45 Consolidated operations $ 0.02 $ 0.56 $ 0.86 $ 0.83 For the Quarter Ended March 31, June 30, September 30, December 31, 2020 2020 2020 2020 Year Ended December 31, 2020 Net revenue: Managed care and other $ 553,168 $ 548,711 $ 568,688 $ 579,454 PBM and dispensing 569,211 551,364 601,429 605,506 Total net revenue 1,122,379 1,100,075 1,170,117 1,184,960 Costs and expenses: Cost of care 349,108 321,831 364,438 362,478 Cost of goods sold 533,241 528,067 560,269 559,140 Direct service costs and other operating expenses (2) 204,241 199,756 216,770 259,401 Depreciation and amortization 23,358 23,888 24,730 26,411 Interest expense 8,958 7,995 7,286 6,626 Interest and other income (1,219) (551) (349) (1,935) Special charges — 8,309 16,599 9,170 Total costs and expenses 1,117,687 1,089,295 1,189,743 1,221,291 Income (loss) from continuing operations before income taxes 4,692 10,780 (19,626) (36,331) Provision (benefit) for income taxes 5,762 (36,328) (2,330) (11,635) Net income (loss) from continuing operations (1,070) 47,108 (17,296) (24,696) Income from discontinued operations, net of tax 19,320 36,397 28,943 293,629 Net Income $ 18,250 $ 83,505 $ 11,647 $ 268,933 . Weighted average number of common shares outstanding—basic 24,728 25,054 25,448 25,781 Weighted average number of common shares outstanding—diluted 24,869 25,278 25,448 25,781 Net income (loss) per common share—basic: Continuing operations $ (0.04) $ 1.88 $ (0.68) $ (0.96) Discontinued operations 0.78 1.45 1.14 11.39 Consolidated operations $ 0.74 $ 3.33 $ 0.46 $ 10.43 Net income (loss) per common share—diluted: Continuing operations $ (0.04) $ 1.86 $ (0.68) $ (0.96) Discontinued operations 0.78 1.44 1.14 11.39 Consolidated operations $ 0.74 $ 3.30 $ 0.46 $ 10.43 (1) Includes stock compensation expense of $9,400, $5,207 , $4,604 and $5,462 for the quarters ended March 31, June 30, September 30 and December 31, 2019, respectively. (2) Includes stock compensation expense of $5,797, $6,592, $5,442 and $7,341 for the quarters ended March 31, June 30, September 30 and December 31, 2020, respectively. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events | |
Subsequent Events | 14. Subsequent Events On January 4, 2021, the Company and Centene Corporation (“Centene”) entered into an Agreement of Plan of Merger (the “Merger Agreement”) by and among the Company, Centene, and Mayflower Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Centene (“Merger Sub”), pursuant to which, subject to the terms and conditions set forth therein, Merger Sub will merge with and into the Company, with the Company surviving such merger as a wholly-owned subsidiary of Centene. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
General | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements 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” or “ASC 326”). 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 adopted ASC 326 on a modified retrospective basis on January 1, 2020. The adoption of ASC 326 did not have a material impact on the Company’s consolidated results of operation, 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, and was adopted by the Company in the quarter ended March 31, 2020 In August 2018, the FASB issued ASU No. 2018-15, “Intangibles-Goodwill and Other–Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”). This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance is effective for annual and interim periods of public entities beginning after December 15, 2019, and was adopted by the Company in the quarter ended March 31, 2020 In December 2019, the FASB issued ASU 2019-12, “Income Taxes – Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing several exceptions in the current standard and adding guidance to reduce the complexity in certain areas, such as requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company did not adopt ASU 2019-12 as of the year ended 2020 but plans to adopt in the first quarter of 2021. The Company does not expect the impact of ASU 2019-12 to be material to its consolidated financial statements. |
Use of Estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates of the Company can include, among other things, valuation of goodwill and intangible assets, medical claims payable, other medical liabilities, stock compensation assumptions, tax contingencies and legal liabilities. In addition, the Company also makes estimates in relation to revenue recognition under Accounting Standard Codification 606 (“ASC 606”) which are explained in more detail in “ Revenue Recognition |
Revenue Recognition | Revenue Recognition Year Ended December 31, 2018 Healthcare Pharmacy Management Elimination Total Major Service Lines Behavioral & Specialty Health Risk-based, non-EAP $ 1,511,532 $ — $ (263) $ 1,511,269 EAP risk-based 349,751 — — 349,751 ASO 249,473 34,130 (344) 283,259 PBM, including dispensing — 2,183,151 (18,471) 2,164,680 Medicare Part D — 442,266 — 442,266 PBA — 132,112 — 132,112 Formulary management — 70,900 — 70,900 Other — 3,285 — 3,285 Total net revenue $ 2,110,756 $ 2,865,844 $ (19,078) $ 4,957,522 Type of Customer Government $ 899,515 $ 946,606 $ — $ 1,846,121 Non-government 1,211,241 1,919,238 (19,078) 3,111,401 Total net revenue $ 2,110,756 $ 2,865,844 $ (19,078) $ 4,957,522 Timing of Revenue Recognition Transferred at a point in time $ — $ 2,625,417 $ (18,471) $ 2,606,946 Transferred over time 2,110,756 240,427 (607) 2,350,576 Total net revenue $ 2,110,756 $ 2,865,844 $ (19,078) $ 4,957,522 Year Ended December 31, 2019 Healthcare Pharmacy Management Elimination Total Major Service Lines Behavioral & Specialty Health Risk-based, non-EAP $ 1,504,472 $ — $ (290) $ 1,504,182 EAP risk-based 339,377 — — 339,377 ASO 238,239 40,348 (302) 278,285 PBM, including dispensing — 1,949,225 (18,151) 1,931,074 Medicare Part D — 287,604 — 287,604 PBA — 137,885 — 137,885 Formulary management — 84,567 — 84,567 Other — 2,639 — 2,639 Total net revenue $ 2,082,088 $ 2,502,268 $ (18,743) $ 4,565,613 Type of Customer Government $ 916,542 $ 831,673 $ — $ 1,748,215 Non-government 1,165,546 1,670,595 (18,743) 2,817,398 Total net revenue $ 2,082,088 $ 2,502,268 $ (18,743) $ 4,565,613 Timing of Revenue Recognition Transferred at a point in time $ — $ 2,236,829 $ (18,151) $ 2,218,678 Transferred over time 2,082,088 265,439 (592) 2,346,935 Total net revenue $ 2,082,088 $ 2,502,268 $ (18,743) $ 4,565,613 Year Ended December 31, 2020 Healthcare Pharmacy Management Elimination Total Major Service Lines Behavioral & Specialty Health Risk-based, non-EAP $ 1,399,532 $ — $ (388) $ 1,399,144 EAP risk-based 315,306 — — 315,306 ASO 245,031 46,892 (315) 291,608 PBM, including dispensing — 2,103,702 (19,936) 2,083,766 Medicare Part D — 243,744 — 243,744 PBA — 136,155 — 136,155 Formulary management — 104,891 — 104,891 Other — 2,917 — 2,917 Total net revenue $ 1,959,869 $ 2,638,301 $ (20,639) $ 4,577,531 Type of Customer Government $ 935,138 $ 821,681 $ — $ 1,756,819 Non-government 1,024,731 1,816,620 (20,639) 2,820,712 Total net revenue $ 1,959,869 $ 2,638,301 $ (20,639) $ 4,577,531 Timing of Revenue Recognition Transferred at a point in time $ — $ 2,347,446 $ (19,936) $ 2,327,510 Transferred over time 1,959,869 290,855 (703) 2,250,021 Total net revenue $ 1,959,869 $ 2,638,301 $ (20,639) $ 4,577,531 Per Member Per Month (“PMPM”) Revenue. 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, collecting 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. st Pharmacy Benefit Administration 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. 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 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 December 31, December 31, 2019 2020 $ Change % Change Accounts receivable $ 717,455 $ 799,803 $ 82,348 11.5% Contract assets 2,162 3,566 1,404 64.9% Contract liabilities - current 6,728 6,772 44 0.7% Contract liabilities - long-term 11,099 11,073 (26) (0.2)% 2021 2022 2023 2024 Significant Customers Customers exceeding ten percent of the consolidated Company’s net revenues The Company had no customers that exceeded ten percent of the Company’s net revenues from continuing operations for the years ended December 31, 2018, 2019 and 2020. The following MCC customers, which are included in discontinued operations, previously exceeded ten percent of the Company’s consolidated net revenues. The Company had contracts with the Commonwealth of Virginia (the “Virginia Contracts”). The Company began providing Medicaid managed long-term services and supports to enrollees in the Commonwealth Coordinated Care Plus (“CCC Plus”) program on August 1, 2017. On August 1, 2018, the Company began providing integrated healthcare services to Medicaid enrollees in the Commonwealth of Virginia under the Medallion 4.0/FAMIS Managed Care Program (“Medallion”). The Virginia Contracts generated net revenues of $476.7 million, $847.8 million and $1,013.2 million for the years ended December 31, 2018, 2019 and 2020, respectively. The Company had a contract with the State of New York (the “New York Contract”) to provide integrated managed care services to Medicaid and Medicare enrollees in the State of New York. The New York Contracts generated net revenues of $691.6 million, $836.4 million and $756.4 million for the years ended December 31, 2018, 2019 and 2020, respectively. The Company had contracts with the Commonwealth of Massachusetts and CMS (the “Massachusetts Contracts”) to provide integrated managed care services to Medicaid and Medicare enrollees in the Commonwealth of Massachusetts. Medicaid services are provided under a Senior Care Options contract (“SCO Contract”) began on January 1, 2016. The Massachusetts Contracts generated net revenues of $682.1 million, $718.9 million and $709.2 million for the years ended December 31, 2018, 2019 and 2020, respectively. Customers exceeding ten percent of segment net revenues In addition to the Massachusetts Contracts, New York Contract and Virginia Contracts previously discussed, the following customers generated in excess of ten percent of net revenues for the respective segment for the years ended December 31, 2018, 2019 and 2020 (in thousands): Segment Term Date 2018 2019 2020 Healthcare Customer A December 31, 2021 $ 308,649 $ 324,321 $ 344,988 Customer B December 31, 2022 169,508 * 199,036 * 198,199 Pharmacy Management Customer C March 31, 2024 344,479 335,682 358,236 * Revenue amount did not exceed 10 percent of net revenues for the respective segment for the year presented. Amount is shown for comparative purposes only. 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 $544.6 million, $537.8 million and $583.0 million for the years ended December 31, 2018, 2019 and 2020, respectively. Net revenues from members in relation to its contract with CMS in aggregate totaled $442.3 million, $287.6 million and $243.7 million for the years ended December 31, 2018, 2019 and 2020 respectively. Net revenues from contracts with various agencies and departments of the United States federal government in aggregate totaled $308.7 million, $299.2 million, and $273.0 million for the years ended December 31, 2018, 2019 and 2020, respectively. The Company’s contracts with customers typically have stated terms of one one |
Income Taxes | Income Taxes The Company files a consolidated federal income tax return with its eighty-percent or more controlled subsidiaries. The Company and its subsidiaries also file income tax returns in various state and local jurisdictions. The Company estimates income taxes for each of the jurisdictions in which it operates. This process involves determining both permanent and temporary differences resulting from differing treatment for tax and book purposes. Deferred tax assets and/or liabilities are determined by multiplying the temporary differences between the financial reporting and tax reporting bases for assets and liabilities by the enacted tax rates expected to be in effect when such differences are recovered or settled. The Company then assesses the likelihood that the deferred tax assets will be recovered from the reversal of temporary differences, the implementation of feasible and prudent tax planning strategies, and future taxable income. To the extent the Company cannot conclude that recovery is more likely than not, it establishes a valuation allowance. The effect of a change in tax rates on deferred taxes is recognized in income in the period that includes the enactment date. Reversals of both valuation allowances and unrecognized tax benefits are recorded in the period they occur, typically as reductions to income tax expense. The Coronavirus Aid, Relief, and Economic Security Act was signed into law on March 27, 2020, and the Consolidated Appropriations Act, 2021 was signed into law on December 27, 2020. Both acts provide widespread emergency relief for the economy and aid to corporations including several significant provisions related to taxes. As of December 31, 2020, the Company has not utilized any of the provisions that would result in a material impact on its results. |
Health Care Reform | Health Care Reform |
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. Book overdrafts are reflected within accounts payable on the balance sheets. At December 31, 2019, the Company had $0.5 million in book overdrafts. There were no book overdrafts at December 31, 2020. At December 31, 2020, the Company’s excess capital and undistributed earnings for the Company’s regulated subsidiaries of approximately $35 million are included in cash and cash equivalents. |
Restricted Assets | Restricted Assets The Company has certain assets which are considered restricted for: (i) the payment of claims under the terms of certain managed care contracts; (ii) regulatory purposes related to the payment of claims in certain jurisdictions; and (iii) the maintenance of minimum required tangible net equity levels for certain of the Company’s subsidiaries. Significant restricted assets of the Company as of December 31, 2019 and 2020 were as follows (in thousands): 2019 2020 Restricted cash and cash equivalents $ 51,253 $ 49,227 Restricted short-term investments 82,772 88,867 Restricted deposits (included in other current assets) 36,215 43,547 Restricted long-term investments 2,307 1,026 Total $ 172,547 $ 182,667 The Company’s equity in restricted net assets of consolidated subsidiaries represented approximately 9.3% of the Company’s consolidated stockholders’ equity as of December 31, 2020 and consisted of net assets of the Company which were restricted as to transfer to Magellan in the form of cash dividends, loans or advances under regulatory restrictions. |
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 financial assets and liabilities that are required to be measured at fair value as of December 31, 2019 and 2020 (in thousands): December 31, 2019 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ — $ 111,085 $ — $ 111,085 Investments: U.S. Government and agency securities 30,775 — — 30,775 Corporate debt securities — 69,581 — 69,581 Certificates of deposit — 1,305 — 1,305 Total assets held at fair value $ 30,775 $ 181,971 $ — $ 212,746 December 31, 2020 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (2) $ — $ 679,554 $ — $ 679,554 Investments: U.S. Government and agency securities 42,399 — — 42,399 Corporate debt securities — 99,749 — 99,749 Certificates of deposit — 1,311 — 1,311 Total assets held at fair value $ 42,399 $ 780,614 $ — $ 823,013 (1) Excludes $4.7 million of cash held in bank accounts by the Company. (2) Excludes $464.9 million of cash held in bank accounts by the Company. For the years ended December 31, 2019 and 2020, the Company did not transfer any assets between fair value measurement levels. The carrying values of financial instruments, including accounts receivable and accounts payable, approximate their fair values due to their short-term maturities. The fair value of the Notes (as defined below) of $381.7 million as of December 31, 2020 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 $263.1 million as of December 31, 2020 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. |
Investments | Investments All of the Company’s investments are classified as “available-for-sale” and are carried at fair value. Securities which have been classified as Level 1 are measured using quoted market prices in active markets for identical assets or liabilities while those which have been classified as Level 2 are measured using quoted prices for identical assets and liabilities in markets that are not active. The Company’s policy is to classify all investments with contractual maturities within one year as current. Investment income is recognized when earned and reported net of investment expenses. Net unrealized holding gains or losses are excluded from earnings and are reported, net of tax, as “accumulated other comprehensive income (loss)” in the accompanying consolidated balance sheets and consolidated statements of comprehensive income until realized, unless the losses are deemed to be other-than-temporary. Realized gains or losses, including any provision for other-than-temporary declines in value, are included in the consolidated statements of income. 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. The credit component of an other-than-temporary impairment is determined by comparing the net present value of projected future cash flows with the amortized cost basis of the debt security. The net present value is calculated by discounting the best estimate of projected future cash flows at the effective interest rate implicit in the debt security at the date of acquisition. Cash flow estimates are driven by assumptions regarding probability of default, including changes in credit ratings, and estimates regarding timing and amount of recoveries associated with a default. Furthermore, unrealized losses entirely caused by non-credit related factors related to debt securities for which the Company expects to fully recover the amortized cost basis continue to be recognized in accumulated other comprehensive income. As of December 31, 2019 and 2020, there were no material unrealized losses that the Company believed to be other-than-temporary. No realized gains or losses were recorded for the years ended December 31, 2018, 2019, or 2020. The following is a summary of short-term and long-term investments at December 31, 2019 and 2020 (in thousands): December 31, 2019 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value U.S. Government and agency securities $ 30,742 $ 38 $ (5) $ 30,775 Corporate debt securities 69,552 40 (11) 69,581 Certificates of deposit 1,305 — — 1,305 Total investments at December 31, 2019 $ 101,599 $ 78 $ (16) $ 101,661 December 31, 2020 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value U.S. Government and agency securities $ 42,389 $ 11 $ (1) $ 42,399 Corporate debt securities 99,861 3 (115) 99,749 Certificates of deposit 1,311 — — 1,311 Total investments at December 31, 2020 $ 143,561 $ 14 $ (116) $ 143,459 The maturity dates of the Company’s investments as of December 31, 2020 are summarized below (in thousands): Amortized Estimated Cost Fair Value 2021 $ 140,950 $ 140,847 2022 2,611 2,612 Total investments at December 31, 2020 $ 143,561 $ 143,459 |
Concentration of Credit Risk | Concentration of Credit Risk Accounts receivable subjects the Company to a concentration of credit risk with third party payors that include health insurance companies, managed healthcare organizations, healthcare providers and governmental entities. The Company maintains cash and cash equivalents balances at financial institutions which are insured by the Federal Deposit Insurance Corporation (“FDIC”). At times, balances in certain bank accounts may exceed the FDIC insured limits. |
Pharmaceutical Inventory | Pharmaceutical Inventory Pharmaceutical inventory consists solely of finished goods (primarily prescription drugs) and is stated at the lower of first-in first-out, cost, or market. |
Long-lived Assets | Long-lived Assets Long-lived assets, including property and equipment and intangible assets to be held and used, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We group and evaluate these long-lived assets for impairment at the lowest level at which individual cash flows can be identified. Impairment is determined by comparing the carrying value of these long-lived assets to management’s best estimate of the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. The cash flow projections used to make this assessment are consistent with the cash flow projections that management uses internally in making key decisions. In the event an impairment exists, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the asset, which is generally determined by using quoted market prices or the discounted present value of expected future cash flows. In the evaluation of indefinite-lived intangible assets for impairment, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying value. If the Company determines that it is not more likely than not for the indefinite-lived intangible asset’s fair value to be less than its carrying value, a calculation of the fair value is not performed. If the Company determines that it is more likely than not that the indefinite-lived intangible asset’s fair value is less than its carrying value, a calculation is performed and compared to the carrying value of the asset. If the carrying amount of the indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The Company measures the fair value of its indefinite-lived intangible assets using the “relief from royalty” method. Significant estimates in this approach include projected revenues and royalty and discount rates for each trade name evaluated. |
Property and Equipment | Property and Equipment Property and equipment is stated at cost, except for assets that have been impaired, for which the carrying amount has been reduced to estimated fair value. Expenditures for renewals and improvements are capitalized to the property accounts. Replacements and maintenance and repairs that do not improve or extend the life of the respective assets are expensed as incurred. The Company capitalizes costs incurred to develop internal-use software during the application development stage. Capitalization of software development costs occurs after the preliminary project stage is complete, management authorizes the project, and it is probable that the project will be completed and the software will be used for the function intended. Amortization of capital lease assets is included in depreciation expense and is included in accumulated depreciation as reflected in the table below. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets, which is generally two three three Property and equipment, net, consisted of the following at December 31, 2019 and 2020 (in thousands): 2019 2020 Building improvements $ 17,726 $ 12,027 Equipment 188,611 188,954 Finance leases - property 26,945 10,455 Finance leases - equipment 26,856 32,568 Capitalized internal-use software 570,989 626,186 831,127 870,190 Accumulated depreciation (699,415) (733,451) Property and equipment, net $ 131,712 $ 136,739 |
Goodwill | |
Intangible Assets | Intangible Assets The Company reviews other intangible assets for impairment when events or changes in circumstances occur which may potentially impact the estimated useful life of the intangible assets. The following is a summary of intangible assets at December 31, 2019 and 2020, and the estimated useful lives for such assets (in thousands, except useful lives): December 31, 2019 Weighted Avg Gross Net Original Remaining Carrying Accumulated Carrying Asset Useful Life Useful Life Amount Amortization Amount Customer agreements and lists 2.5 to 18 years 3.3 years $ 347,033 $ (267,977) $ 79,056 Provider networks and other 1 to 16 years 2.3 years 20,760 (18,141) 2,619 $ 367,793 $ (286,118) $ 81,675 December 31, 2020 Weighted Avg Gross Net Original Remaining Carrying Accumulated Carrying Asset Useful Life Useful Life Amount Amortization Amount Customer agreements and lists 2.5 to 18 years 4.7 years $ 380,853 $ (306,173) $ 74,680 Provider networks and other 1 to 16 years 2.8 years 24,151 (20,692) 3,459 Trade names and licenses indefinite indefinite 1,550 — 1,550 $ 406,554 $ (326,865) $ 79,689 Amortization expense was $34.0 million, $38.9 million and $40.0 million for the years ended December 31, 2018, 2019 and 2020, respectively. The Company estimates amortization expense will be $30.5 million, $17.8 million, $9.3 million, $5.8 million and $5.1 million for the years ending December 31, 2021, 2022, 2023, 2024 and 2025, respectively. |
Cost of Care, Medical Claims Payable and Other Medical Liabilities | Cost of Care, Medical Claims Payable and Other Medical Liabilities Cost of care is recognized in the period in which members receive managed healthcare services. In addition to actual benefits paid, cost of care in a period also includes the impact of accruals for estimates of medical claims payable. Medical claims payable represents the liability for healthcare claims reported but not yet paid and claims incurred but not yet reported (“IBNR”) related to the Company’s managed healthcare businesses. Such liabilities are determined by employing actuarial methods that are commonly used by health insurance actuaries and that meet actuarial standards of practice. Cost of care for the Company’s EAP contracts, which are mainly with the United States federal government, pertain to the costs to employ licensed behavioral health counselors to deliver non-medical counseling for these contracts. The IBNR portion of medical claims payable is estimated based on past claims payment experience for member groups, enrollment data, utilization statistics, authorized healthcare services and other factors. This data is incorporated into contract-specific actuarial reserve models and is further analyzed to create “completion factors” that represent the average percentage of total incurred claims that have been paid through a given date after being incurred. Factors that affect estimated completion factors include benefit changes, enrollment changes, shifts in product mix, seasonality influences, provider reimbursement changes, changes in claims inventory levels, the speed of claims processing and changes in paid claim levels. Completion factors are applied to claims paid through the financial statement date to estimate the ultimate claim expense incurred for the current period. Actuarial estimates of claim liabilities are then determined by subtracting the actual paid claims from the estimate of the ultimate incurred claims. For the most recent incurred months (generally the most recent two months), the percentage of claims paid for claims incurred in those months is generally low. This makes the completion factor methodology less reliable for such months. Therefore, incurred claims for any month with a completion factor that is less than 70 percent are generally not projected from historical completion and payment patterns; rather they are projected by estimating claims expense based on recent monthly estimated cost incurred per member per month times membership, taking into account seasonality influences, benefit changes and healthcare trend levels, collectively considered to be “trend factors.” For new contracts, the Company estimates IBNR based on underwriting data until it has sufficient data to utilize these methodologies. Medical claims payable balances are continually monitored and reviewed. If it is determined that the Company’s assumptions in estimating such liabilities are significantly different than actual results, the Company’s results of operations and financial position could be impacted in future periods. Adjustments of prior period estimates may result in additional cost of care or a reduction of cost of care in the period an adjustment is made. Further, due to the considerable variability of healthcare costs, adjustments to claim liabilities occur each period and are sometimes significant as compared to the net income recorded in that period. Prior period development is recognized immediately upon the actuary’s judgment that a portion of the prior period liability is no longer needed or that additional liability needs to be accrued. The following table presents the components of the change in medical claims payable for the years ended December 31, 2018, 2019 and 2020 (in thousands): 2018 2019 2020 Claims payable and IBNR, beginning of period $ 126,861 $ 126,311 $ 123,276 Cost of care: Current year 1,555,491 1,545,024 1,403,555 Prior years(3) (800) (1,500) (5,700) Total cost of care 1,554,691 1,543,524 1,397,855 Claim payments and transfers to other medical liabilities(1): Current year 1,441,621 1,433,214 1,306,519 Prior years 113,620 113,345 107,241 Total claim payments and transfers to other medical liabilities 1,555,241 1,546,559 1,413,760 Claims payable and IBNR, end of period 126,311 123,276 107,371 Withhold payable, end of period(2) 3,418 4,838 4,480 Medical claims payable, end of period $ 129,729 $ 128,114 $ 111,851 (1) For any given period, a portion of unpaid medical claims payable could be covered by risk share or reinvestment liabilities (discussed below) and may not impact the Company’s results of operations for such periods. (2) Medical claims payable is offset by customer withholds from capitation payments in situations in which the customer has the contractual requirement to pay providers for care incurred. (3) Favorable development in 2018, 2019 and 2020 was $0.8 million, $1.5 million and $5.7 million, respectively, and was mainly related to lower medical trends and faster claims completion than originally assumed. Actuarial standards of practice require that claim liabilities be adequate under moderately adverse circumstances. Adverse circumstances are situations in which the actual claims experience could be higher than the otherwise estimated value of such claims. In many situations, the claims paid amount experienced will be less than the estimate that satisfies the actuarial standards of practice. Any prior period favorable cost of care development related to a lack of moderately adverse conditions is excluded from “Cost of Care – Prior Years” adjustments, as a similar provision for moderately adverse conditions is established for current year cost of care liabilities and therefore does not generally impact net income. Due to the existence of risk sharing and reinvestment provisions in certain customer contracts, principally in the Government contracts, a change in the estimate for medical claims payable does not necessarily result in an equivalent impact on segment profit. The Company believes that the amount of medical claims payable is adequate to cover its ultimate liability for unpaid claims as of December 31, 2020; however, actual claims payments may differ from established estimates. Other medical liabilities consist primarily of amounts payable to pharmacies for claims that have been adjudicated by the Company but not yet paid and “profit share” payables under certain risk-based contracts. Under a contract with profit share provisions, if the cost of care is below certain specified levels, the Company will “share” the cost savings with the customer at the percentages set forth in the contract. In addition, certain contracts include provisions to provide the Company additional funding if the cost of care is above the specified levels. Other medical liabilities also include “reinvestment” payables under certain managed healthcare contracts with Medicaid customers. Under a contract with reinvestment features, if the cost of care is less than certain minimum amounts specified in the contract (usually as a percentage of revenue), the Company is required to “reinvest” such difference in behavioral healthcare programs when and as specified by the customer or to pay the difference to the customer for their use in funding such programs. |
Leases | Leases The Company leases certain office space, distribution centers, land and equipment. We assess our contracts to determine if they contain a lease. This assessment is based on (i) the right to control the use of an identified asset; (ii) the right to obtain substantially all of the economic benefits from the use of the identified asset; and (iii) the right to use the identified asset. The Company elected the short-term lease practical expedient; thus, leases with an initial term of twelve months or less are not capitalized and the expense is recognized on a straight-line basis. Most leases include one or more options to renew, with renewal terms that can extend the lease from one Operating leases are included in other long-term assets, accrued liabilities and deferred credits and other long-term liabilities in the consolidated balance sheets. Finance leases are included in property and equipment, current debt, capital lease deferred financing obligations and long-term debt, capital lease and deferred financing obligations in the consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments per the lease. Operating lease ROU assets and liabilities are recognized at lease commencement date based on the present value of lease payments over the lease term. As the rate implicit in most of our leases is not readily determinable, the Company used its incremental borrowing rate to determine the present value of lease payments. The following table shows the components of lease expenses for the year ended December 31, 2020 (in thousands): Year Ended Operating lease cost $ 9,506 Finance lease cost: Amortization of right-of-use asset 3,419 Interest on lease liabilities 785 Total finance lease cost 4,204 Short-term lease cost 298 Variable lease cost 2,656 Total lease cost 16,664 Sublease income (258) Net lease cost $ 16,406 The following table shows the components of the lease assets and liabilities as of December 31, 2020 (in thousands): December 31, 2020 Operating leases: Other long-term assets $ 23,545 Accrued liabilities $ 14,526 Deferred credits and other long-term liabilities 24,923 Total operating lease liabilities $ 39,449 Finance leases: Property and equipment, net $ 11,892 Current debt, finance lease and deferred financing obligations $ 4,460 Long-term debt, finance lease and deferred financing obligations 11,967 Total finance lease liabilities $ 16,427 The maturity dates of the Company’s leases as of December 31, 2020 are summarized below (in thousands): December 31, 2020 2020 $ 19,535 2021 14,883 2022 10,349 2023 8,557 2024 3,228 2025 and beyond 673 Total lease payments 57,225 Less interest (1,349) Present value of lease liabilities $ 55,876 The following table shows the weighted average remaining lease term and discount rate as of December 31, 2020: December 31, 2020 Weighted average remaining lease term Operating leases 3.94 Finance leases 3.96 Weighted average discount rate Operating leases 4.79% Finance leases 4.39% Year ended December 31, 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 12,268 Operating cash flows from finance leases 5,401 Financing cash flows from finance leases 785 Right-of-use asset obtained in exchange for new lease obligation Operating leases 1,677 Finance leases 3,599 |
Accrued Liabilities | Accrued Liabilities As of December 31, 2019, the individual current liabilities that exceeded five percent of total current liabilities related to accrued customer settlement liabilities of $21.4 million and accounts payable rebates of $51.0 million. As of December 31, 2020, the individual current liabilities that exceeded five percent of total current liabilities related to accrued employee compensation liabilities of $106.7 million, accounts payable rebates of $101.7 million, state and federal income tax liabilities of $56.6 million and accrued customer settlement liabilities of $41.1 million. |
Net Income per Common Share attributable to Magellan | Net Income per Common Share attributable to Magellan Net income per common share attributable to Magellan is computed based on the weighted average number of shares of common stock and common stock equivalents outstanding during the period (see Note 6—“Stockholders’ Equity”). |
Stock Compensation | Stock Compensation |
Redeemable Non-Controlling Interest | Redeemable Non-Controlling Interest As of December 31, 2020, the Company held a 70% equity interest in Aurelia Health, LLC (“Aurelia”). The other shareholders of Aurelia have the right to exercise put options, requiring the Company to purchase up to 33.3% of the remaining shares during the thirty-day period beginning on January 15, 2022 and each subsequent anniversary thereafter. In addition, for the thirty-day period beginning on January 15, 2022 and each subsequent anniversary thereafter, the Company has the right to purchase 33.3% of the remaining shares (“call option”). The redemption price for these put and call options is based on a fixed multiple of the trailing twelve-month EBITDA at the redemption date. Non-controlling interests with redemption features, such as put options, that are not solely within the Company’s control are considered redeemable non-controlling interests. Redeemable non-controlling interest is considered to be temporary and is therefore reported in a mezzanine level between liabilities and stockholders’ equity on the Company’s consolidated balance sheet at the greater of the initial carrying amount adjusted for the non-controlling interest’s share of net income or loss or its redemption value. The carrying value of the non-controlling interest as of December 31, 2020 was $33.1 million. The Company will evaluate the redemption value on a quarterly basis. If the redemption value is greater than the carrying value, the Company will adjust the carrying amount of the non-controlling interest to equal the redemption value at the end of each reporting period. Under this method, this is viewed at the end of the reporting period as if it were also the redemption date for the non-controlling interest. The Company will reflect redemption value adjustments in the earnings per share (“EPS”) calculation if redemption value is in excess of the carrying value of the non-controlling interest. As of December 31, 2020, the carrying value of the non-controlling interest exceeded the redemption value and therefore no adjustment to the carrying value was required. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |
Schedule of disaggregation of revenue by major service line, type of customer and timing of revenue recognition | Year Ended December 31, 2018 Healthcare Pharmacy Management Elimination Total Major Service Lines Behavioral & Specialty Health Risk-based, non-EAP $ 1,511,532 $ — $ (263) $ 1,511,269 EAP risk-based 349,751 — — 349,751 ASO 249,473 34,130 (344) 283,259 PBM, including dispensing — 2,183,151 (18,471) 2,164,680 Medicare Part D — 442,266 — 442,266 PBA — 132,112 — 132,112 Formulary management — 70,900 — 70,900 Other — 3,285 — 3,285 Total net revenue $ 2,110,756 $ 2,865,844 $ (19,078) $ 4,957,522 Type of Customer Government $ 899,515 $ 946,606 $ — $ 1,846,121 Non-government 1,211,241 1,919,238 (19,078) 3,111,401 Total net revenue $ 2,110,756 $ 2,865,844 $ (19,078) $ 4,957,522 Timing of Revenue Recognition Transferred at a point in time $ — $ 2,625,417 $ (18,471) $ 2,606,946 Transferred over time 2,110,756 240,427 (607) 2,350,576 Total net revenue $ 2,110,756 $ 2,865,844 $ (19,078) $ 4,957,522 Year Ended December 31, 2019 Healthcare Pharmacy Management Elimination Total Major Service Lines Behavioral & Specialty Health Risk-based, non-EAP $ 1,504,472 $ — $ (290) $ 1,504,182 EAP risk-based 339,377 — — 339,377 ASO 238,239 40,348 (302) 278,285 PBM, including dispensing — 1,949,225 (18,151) 1,931,074 Medicare Part D — 287,604 — 287,604 PBA — 137,885 — 137,885 Formulary management — 84,567 — 84,567 Other — 2,639 — 2,639 Total net revenue $ 2,082,088 $ 2,502,268 $ (18,743) $ 4,565,613 Type of Customer Government $ 916,542 $ 831,673 $ — $ 1,748,215 Non-government 1,165,546 1,670,595 (18,743) 2,817,398 Total net revenue $ 2,082,088 $ 2,502,268 $ (18,743) $ 4,565,613 Timing of Revenue Recognition Transferred at a point in time $ — $ 2,236,829 $ (18,151) $ 2,218,678 Transferred over time 2,082,088 265,439 (592) 2,346,935 Total net revenue $ 2,082,088 $ 2,502,268 $ (18,743) $ 4,565,613 Year Ended December 31, 2020 Healthcare Pharmacy Management Elimination Total Major Service Lines Behavioral & Specialty Health Risk-based, non-EAP $ 1,399,532 $ — $ (388) $ 1,399,144 EAP risk-based 315,306 — — 315,306 ASO 245,031 46,892 (315) 291,608 PBM, including dispensing — 2,103,702 (19,936) 2,083,766 Medicare Part D — 243,744 — 243,744 PBA — 136,155 — 136,155 Formulary management — 104,891 — 104,891 Other — 2,917 — 2,917 Total net revenue $ 1,959,869 $ 2,638,301 $ (20,639) $ 4,577,531 Type of Customer Government $ 935,138 $ 821,681 $ — $ 1,756,819 Non-government 1,024,731 1,816,620 (20,639) 2,820,712 Total net revenue $ 1,959,869 $ 2,638,301 $ (20,639) $ 4,577,531 Timing of Revenue Recognition Transferred at a point in time $ — $ 2,347,446 $ (19,936) $ 2,327,510 Transferred over time 1,959,869 290,855 (703) 2,250,021 Total net revenue $ 1,959,869 $ 2,638,301 $ (20,639) $ 4,577,531 |
Schedule of accounts receivable, contract assets and contract liabilities | December 31, December 31, 2019 2020 $ Change % Change Accounts receivable $ 717,455 $ 799,803 $ 82,348 11.5% Contract assets 2,162 3,566 1,404 64.9% Contract liabilities - current 6,728 6,772 44 0.7% Contract liabilities - long-term 11,099 11,073 (26) (0.2)% |
Schedule of customers generating in excess of ten percent of net revenues for respective segment | Segment Term Date 2018 2019 2020 Healthcare Customer A December 31, 2021 $ 308,649 $ 324,321 $ 344,988 Customer B December 31, 2022 169,508 * 199,036 * 198,199 Pharmacy Management Customer C March 31, 2024 344,479 335,682 358,236 * Revenue amount did not exceed 10 percent of net revenues for the respective segment for the year presented. Amount is shown for comparative purposes only. |
Schedule of significant restricted assets | 2019 2020 Restricted cash and cash equivalents $ 51,253 $ 49,227 Restricted short-term investments 82,772 88,867 Restricted deposits (included in other current assets) 36,215 43,547 Restricted long-term investments 2,307 1,026 Total $ 172,547 $ 182,667 |
Schedule of fair value of financial assets and liabilities | December 31, 2019 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ — $ 111,085 $ — $ 111,085 Investments: U.S. Government and agency securities 30,775 — — 30,775 Corporate debt securities — 69,581 — 69,581 Certificates of deposit — 1,305 — 1,305 Total assets held at fair value $ 30,775 $ 181,971 $ — $ 212,746 December 31, 2020 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (2) $ — $ 679,554 $ — $ 679,554 Investments: U.S. Government and agency securities 42,399 — — 42,399 Corporate debt securities — 99,749 — 99,749 Certificates of deposit — 1,311 — 1,311 Total assets held at fair value $ 42,399 $ 780,614 $ — $ 823,013 (1) Excludes $4.7 million of cash held in bank accounts by the Company. (2) Excludes $464.9 million of cash held in bank accounts by the Company. |
Summary of short-term and long-term investments | December 31, 2019 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value U.S. Government and agency securities $ 30,742 $ 38 $ (5) $ 30,775 Corporate debt securities 69,552 40 (11) 69,581 Certificates of deposit 1,305 — — 1,305 Total investments at December 31, 2019 $ 101,599 $ 78 $ (16) $ 101,661 December 31, 2020 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value U.S. Government and agency securities $ 42,389 $ 11 $ (1) $ 42,399 Corporate debt securities 99,861 3 (115) 99,749 Certificates of deposit 1,311 — — 1,311 Total investments at December 31, 2020 $ 143,561 $ 14 $ (116) $ 143,459 |
Summary of maturity dates of investments | December 31, 2020 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value U.S. Government and agency securities $ 42,389 $ 11 $ (1) $ 42,399 Corporate debt securities 99,861 3 (115) 99,749 Certificates of deposit 1,311 — — 1,311 Total investments at December 31, 2020 $ 143,561 $ 14 $ (116) $ 143,459 |
Schedule of net property and equipment | 2019 2020 Building improvements $ 17,726 $ 12,027 Equipment 188,611 188,954 Finance leases - property 26,945 10,455 Finance leases - equipment 26,856 32,568 Capitalized internal-use software 570,989 626,186 831,127 870,190 Accumulated depreciation (699,415) (733,451) Property and equipment, net $ 131,712 $ 136,739 |
Schedule of goodwill | 2019 2020 Behavioral & Specialty Health $ 410,869 $ 478,227 Pharmacy Management 395,552 395,552 Total $ 806,421 $ 873,779 2019 2020 Balance as of beginning of period $ 806,421 $ 806,421 Acquisition of Bayless — 67,358 Balance as of end of period $ 806,421 $ 873,779 |
Schedule of intangible assets | The following is a summary of intangible assets at December 31, 2019 and 2020, and the estimated useful lives for such assets (in thousands, except useful lives): December 31, 2019 Weighted Avg Gross Net Original Remaining Carrying Accumulated Carrying Asset Useful Life Useful Life Amount Amortization Amount Customer agreements and lists 2.5 to 18 years 3.3 years $ 347,033 $ (267,977) $ 79,056 Provider networks and other 1 to 16 years 2.3 years 20,760 (18,141) 2,619 $ 367,793 $ (286,118) $ 81,675 December 31, 2020 Weighted Avg Gross Net Original Remaining Carrying Accumulated Carrying Asset Useful Life Useful Life Amount Amortization Amount Customer agreements and lists 2.5 to 18 years 4.7 years $ 380,853 $ (306,173) $ 74,680 Provider networks and other 1 to 16 years 2.8 years 24,151 (20,692) 3,459 Trade names and licenses indefinite indefinite 1,550 — 1,550 $ 406,554 $ (326,865) $ 79,689 |
Schedule of changes in medical claims payable | 2018 2019 2020 Claims payable and IBNR, beginning of period $ 126,861 $ 126,311 $ 123,276 Cost of care: Current year 1,555,491 1,545,024 1,403,555 Prior years(3) (800) (1,500) (5,700) Total cost of care 1,554,691 1,543,524 1,397,855 Claim payments and transfers to other medical liabilities(1): Current year 1,441,621 1,433,214 1,306,519 Prior years 113,620 113,345 107,241 Total claim payments and transfers to other medical liabilities 1,555,241 1,546,559 1,413,760 Claims payable and IBNR, end of period 126,311 123,276 107,371 Withhold payable, end of period(2) 3,418 4,838 4,480 Medical claims payable, end of period $ 129,729 $ 128,114 $ 111,851 (1) For any given period, a portion of unpaid medical claims payable could be covered by risk share or reinvestment liabilities (discussed below) and may not impact the Company’s results of operations for such periods. (2) Medical claims payable is offset by customer withholds from capitation payments in situations in which the customer has the contractual requirement to pay providers for care incurred. (3) Favorable development in 2018, 2019 and 2020 was $0.8 million, $1.5 million and $5.7 million, respectively, and was mainly related to lower medical trends and faster claims completion than originally assumed. |
Schedule of leases | Year Ended Operating lease cost $ 9,506 Finance lease cost: Amortization of right-of-use asset 3,419 Interest on lease liabilities 785 Total finance lease cost 4,204 Short-term lease cost 298 Variable lease cost 2,656 Total lease cost 16,664 Sublease income (258) Net lease cost $ 16,406 December 31, 2020 Operating leases: Other long-term assets $ 23,545 Accrued liabilities $ 14,526 Deferred credits and other long-term liabilities 24,923 Total operating lease liabilities $ 39,449 Finance leases: Property and equipment, net $ 11,892 Current debt, finance lease and deferred financing obligations $ 4,460 Long-term debt, finance lease and deferred financing obligations 11,967 Total finance lease liabilities $ 16,427 December 31, 2020 Weighted average remaining lease term Operating leases 3.94 Finance leases 3.96 Weighted average discount rate Operating leases 4.79% Finance leases 4.39% Year ended December 31, 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 12,268 Operating cash flows from finance leases 5,401 Financing cash flows from finance leases 785 Right-of-use asset obtained in exchange for new lease obligation Operating leases 1,677 Finance leases 3,599 |
Schedule of maturity dates of leases | December 31, 2020 2020 $ 19,535 2021 14,883 2022 10,349 2023 8,557 2024 3,228 2025 and beyond 673 Total lease payments 57,225 Less interest (1,349) Present value of lease liabilities $ 55,876 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Acquisitions | |
Summary of estimated fair values of assets acquired and liabilities assumed at the date of the acquisition | Assets acquired: Current assets (includes $330 and $7,189 of cash and accounts receivable, respectively) $ 9,974 Property and equipment, net 699 Other assets 3,182 Identified intangible assets 38,011 Goodwill 67,358 Total assets acquired 119,224 Liabilities assumed: Current liabilities 1,825 Other liabilities 4,294 Total liabilities assumed 6,119 Net assets acquired 113,105 Redeemable non-controlling interest 33,006 Total Consideration $ 80,099 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity | |
Schedule of stock option activity | 2018 2019 Weighted Weighted Average Average Exercise Exercise Options Price Options Price Outstanding, beginning of period 2,458,237 $ 61.50 2,352,609 $ 68.10 Granted 477,956 96.39 429,124 66.22 Forfeited (174,376) 80.21 (112,120) 78.18 Exercised (409,208) 56.36 (543,752) 60.16 Outstanding, end of period 2,352,609 68.10 2,125,861 69.22 2020 Weighted Average Weighted Remaining Aggregate Average Contractual Intrinsic Exercise Term Value Options Price (in years) (in thousands) Outstanding, beginning of period 2,125,861 $ 69.22 Granted 63,771 62.93 Forfeited (102,163) 75.63 Exercised (1,042,186) 61.92 Outstanding, end of period 1,045,283 $ 75.48 4.55 $ 12,984 Vested and expected to vest at end of period 1,042,443 $ 75.51 4.54 $ 12,936 Exercisable, end of period 841,892 $ 76.41 3.65 $ 10,131 |
Schedule of weighted average assumptions used to determine weighted average grant date fair value | 2018 2019 2020 Risk-free interest rate 2.54 % 2.50 % 1.06 % Expected life 4 years 4 years 4 years Expected volatility 28.20 % 35.56 % 35.56 % Expected dividend yield 0.00 % 0.00 % 0.00 % |
Schedule of nonvested restricted stock award activity | 2018 2019 2020 Weighted Weighted Weighted Average Average Average Grant Date Grant Date Grant Date Shares Fair Value Shares Fair Value Shares Fair Value Outstanding, beginning of period 31,102 $ 68.00 11,795 $ 89.05 39,761 $ 65.40 Awarded 11,795 89.05 41,905 65.60 54,314 76.72 Vested (31,102) 68.00 (13,939) 85.99 (39,761) 65.40 Forfeited — — — — — — Outstanding, ending of period 11,795 89.05 39,761 65.40 54,314 76.72 |
Schedule of nonvested restricted stock units | 2018 2019 2020 Weighted Weighted Weighted Average Average Average Grant Date Grant Date Grant Date Shares Fair Value Shares Fair Value Shares Fair Value Outstanding, beginning of period 163,289 $ 66.46 156,750 $ 86.68 256,430 $ 74.12 Awarded 111,033 99.29 212,065 67.92 355,689 62.48 Vested (84,627) 65.20 (68,993) 81.95 (108,996) 75.15 Forfeited (32,945) 84.17 (43,392) 76.71 (74,761) 64.79 Outstanding, ending of period 156,750 86.68 256,430 74.12 428,362 65.83 |
Summary of nonvested performance-based restricted stock units | 2018 2019 2020 Weighted Weighted Weighted Average Average Average Grant Date Grant Date Grant Date Shares Fair Value Shares Fair Value Shares Fair Value Outstanding, beginning of period 202,315 $ 84.63 209,019 $ 103.38 248,559 $ 104.27 Awarded 80,502 141.61 101,498 101.82 138,114 76.88 Vested (33,592) 85.0 (43,109) 97.12 (52,861) 76.24 Forfeited (40,206) 100.96 (18,849) 97.49 (54,867) 85.09 Outstanding, end of period 209,019 103.38 248,559 104.27 278,945 99.80 |
Schedule of computation of basic and diluted earnings per share | 2018 2019 2020 Numerator: Net income from continuing operations $ 22,176 $ 12,597 $ 4,046 Income from discontinued operations, net of tax 2,005 43,305 378,289 Net income $ 24,181 $ 55,902 $ 382,335 Denominator: Weighted average number of common shares outstanding—basic 24,349 24,243 25,255 Common stock equivalents—stock options 493 142 79 Common stock equivalents—RSAs 15 8 18 Common stock equivalents—RSUs 37 35 104 Common stock equivalents—PSUs 137 131 72 Common stock equivalents—employee stock purchase plan 4 4 4 Weighted average number of common shares outstanding—diluted 25,035 24,563 25,532 Net income per common share—basic: Continuing operations $ 0.91 $ 0.52 $ 0.16 Discontinued operations 0.08 1.79 14.98 Consolidated operations $ 0.99 $ 2.31 $ 15.14 Net income per common share—diluted: Continuing operations $ 0.89 $ 0.51 $ 0.16 Discontinued operations 0.08 1.76 14.82 Consolidated operations $ 0.97 $ 2.27 $ 14.98 |
Schedule of stock repurchases made | 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 January 1, 2018 - December 31, 2018 844,872 74.59 63.0 January 1, 2019 - December 31, 2019 60,901 61.15 3.7 January 1, 2020 - December 31, 2020 — — — 3,359,140 $ 213.7 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Taxes | |
Schedule of components of income tax expense (benefit) | 2018 2019 2020 Income taxes currently payable: Federal $ 8,918 $ 2,051 $ (31,567) State 3,241 27 (5,238) 12,159 2,078 (36,805) Deferred income taxes (benefits): Federal (912) 5,378 (5,903) State 210 1,706 (1,823) (702) 7,084 (7,726) Total income tax expense (benefit) $ 11,457 $ 9,162 $ (44,531) |
Schedule of differences between total income tax expense and amount computed using the statutory federal income tax rate | 2018 2019 2020 Income tax expense (benefit) at federal statutory rate $ 7,063 $ 4,569 $ (8,501) State income taxes (benefit), net of federal income tax benefit 3,407 1,285 (1,632) State contingencies added 2,287 944 1,519 Tax contingencies reversed due to statute closings (2,500) (2,860) (1,762) Change in valuation allowances (691) 584 (924) Share-based compensation (4,750) 1,715 2,982 Qualified research credit (1,584) (1,418) (2,424) Non-deductible executive compensation 3,052 3,153 2,717 Non-deductible HIF fees 3,236 — 3,263 Sale of MCC Business — — (39,819) Other-net 1,937 1,190 50 Total income tax expense $ 11,457 $ 9,162 $ (44,531) |
Schedule of components of deferred tax assets and liabilities | 2019 2020 Deferred tax assets: Net operating loss carryforwards $ 3,824 $ 3,760 Share-based compensation 9,167 4,365 Other accrued compensation 10,697 17,037 Claims reserves 5,355 2,241 Deferred revenue 4,122 4,491 Accrued severance 1,244 3,505 Other non-deductible accrued liabilities 1,210 1,224 Indirect tax benefits 1,867 2,247 Operating lease--right-of-use liabilities 18,603 13,564 Other deferred tax assets 111 1,962 Total deferred tax assets 56,200 54,396 Valuation allowances (1,828) (905) Deferred tax assets after valuation allowances 54,372 53,491 Deferred tax liabilities: Depreciation (20,479) (29,967) Amortization of goodwill and intangible assets (12,569) (15,670) Operating lease--right-of-use assets (15,893) (7,091) Other deferred tax liabilities (5,562) (6,023) Total deferred tax liabilities (54,503) (58,751) Net deferred tax liabilities from continued operations $ (131) $ (5,260) |
Schedule of reconciliation of the beginning and ending amount of gross unrecognized tax benefits | 2018 2019 2020 Balance as of beginning of period $ 10,411 $ 10,823 $ 9,010 Additions for current year tax positions 2,925 1,180 3,316 Additions for tax positions of prior years 397 699 29 Reductions for tax positions of prior years (44) (472) (85) Reductions due to lapses of applicable statutes of limitations (2,906) (3,177) (1,826) Changes due to Tax Act 339 — — Reductions due to settlements with taxing authorities (299) (43) — Balance as of end of period $ 10,823 $ 9,010 $ 10,444 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Supplemental Cash Flow Information | |
Schedule of supplemental cash flow information | Supplemental cash flow information for the years ended December 31, 2018, 2019 and 2020 is as follows (in thousands): 2018 2019 2020 Income taxes paid, net of refunds $ 40,179 $ 4,774 $ 49,197 Interest paid $ 34,223 $ 29,892 $ 29,840 Assets acquired through finance leases and deferred financing $ 20,576 $ 3,302 $ 3,599 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Discontinued Operations | |
Summary of discontinued operations | December 31, 2019 Assets Held For Sale Cash and cash equivalents ($95,202 restricted) $ 209,497 Accounts receivable, net 209,496 Short-term and long-term investments ($243,496 restricted) 243,496 Property and equipment, net 6,710 Goodwill 211,735 Other intangible assets, net 85,669 Other current and long-term assets ($2,387 restricted) 32,386 Total Assets Held For Sale 998,989 Less: current portion 663,276 Total Assets Held For Sale, Less Current Portion $ 335,713 Liabilities Held For Sale Accounts payable $ 4,625 Accrued liabilities 92,170 Medical claims payable 281,419 Other medical liabilities 31,769 Deferred income taxes 15,063 Tax contingencies 5,388 Deferred credits and other long-term liabilities 16,850 Total Liabilities Held For Sale 447,284 Less: current portion 409,983 Total Liabilities Held For Sale, Less Current Portion $ 37,301 Year Ended December 31, 2018 2019 2020 Managed care and other revenue $ 2,529,386 $ 2,757,511 $ 2,924,014 Costs and expenses: Cost of care 2,207,721 2,397,007 2,377,847 Direct service costs and other operating expenses (1)(2)(3) 300,696 292,351 360,783 Depreciation and amortization 20,376 21,142 20,358 Interest expense 216 285 89 Interest and other income (9,184) (12,332) (5,464) Gain on sale — — (348,145) Total costs and expenses 2,519,825 2,698,453 2,405,468 Income from discontinued operation before income taxes 9,561 59,058 518,546 Provision for income taxes 7,556 15,753 140,257 Net income from discontinued operations $ 2,005 $ 43,305 $ 378,289 (1) Includes stock compensation expense of $536, $828 and $278 for the years ended December 31, 2018, 2019 and 2020 respectively. (2) Includes changes in fair value of contingent consideration of $199 and $(2,124) for the years ended December 31, 2018 and 2019, respectively. (3) Includes divestiture related expenses of $9,379 for the year ended December 31, 2020. |
Special Charges (Tables)
Special Charges (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Special Charges | |
Summary of the components of special charges | Year Ended December 31, 2020 Non-cash related special charges Right-of-use assets $ 7,051 Fixed assets 15,081 Total non-cash related special charges 22,132 Cash related special charges Employee severance and termination benefits 11,330 Lease shutdown costs 616 Total cash related special charges 11,946 Total special charges $ 34,078 |
Roll-forward of the Transformation Initiative liabilities | Balance Balance December 31, December 31, 2019 Additions Payments 2020 Employee severance and termination benefits $ — $ 11,330 $ (347) $ 10,983 Lease shutdown costs — 616 (6) 610 $ — $ 11,946 $ (353) $ 11,593 |
Business Segment Information (T
Business Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Business Segment Information | |
Schedule of operating results by business segment | Corporate Pharmacy and Healthcare Management Elimination Consolidated Year Ended December 31, 2018 Managed care and other revenue $ 2,110,756 $ 240,427 $ (607) $ 2,350,576 PBM and dispensing revenue — 2,625,417 (18,471) 2,606,946 Cost of care (1,554,691) — — (1,554,691) Cost of goods sold — (2,468,170) 15,467 (2,452,703) Direct service costs and other (401,083) (298,713) (74,119) (773,915) Stock compensation expense (1) 6,446 5,458 17,032 28,936 Changes in fair value of contingent consideration (1) 1,108 — — 1,108 Segment profit (loss) $ 162,536 $ 104,419 $ (60,698) $ 206,257 Identifiable assets by business segment (2) Restricted cash $ 52,681 $ 576 $ 2,954 $ 56,211 Net accounts receivable 192,239 465,345 150 657,734 Investments 91,841 7,037 — 98,878 Pharmaceutical inventory — 40,818 — 40,818 Goodwill 410,869 395,552 — 806,421 Other intangible assets, net 32,893 82,072 13,167 128,132 Corporate Pharmacy and Healthcare Management Elimination Consolidated Year Ended December 31, 2019 Managed care and other revenue $ 2,082,088 $ 265,439 $ (592) $ 2,346,935 PBM revenue — 2,236,829 (18,151) 2,218,678 Cost of care (1,543,524) — — (1,543,524) Cost of goods sold — (2,076,509) 17,224 (2,059,285) Direct service costs and other (402,006) (323,162) (76,499) (801,667) Stock compensation expense (1) 7,639 7,834 9,200 24,673 Segment Profit (Loss) $ 144,197 $ 110,431 $ (68,818) $ 185,810 Identifiable assets by business segment (2) Restricted cash $ 49,027 $ 2,226 $ — $ 51,253 Net accounts receivable 201,462 478,627 480 680,569 Investments 94,943 6,718 — 101,661 Pharmaceutical inventory — 44,962 — 44,962 Goodwill 410,869 395,552 — 806,421 Other intangible assets, net 20,059 61,536 80 81,675 Corporate Pharmacy and Healthcare Management Elimination Consolidated Year Ended December 31, 2020 Managed care and other revenue $ 1,959,869 $ 290,855 $ (703) $ 2,250,021 PBM revenue — 2,347,446 (19,936) 2,327,510 Cost of care (1,397,855) — — (1,397,855) Cost of goods sold — (2,199,674) 18,957 (2,180,717) Direct service costs and other (433,723) (360,970) (85,475) (880,168) Stock compensation expense (1) 6,876 7,723 10,573 25,172 Segment Profit (Loss) $ 135,167 $ 85,380 $ (76,584) $ 143,963 Identifiable assets by business segment (2) Restricted cash $ 33,381 $ 12,658 $ 3,188 $ 49,227 Net accounts receivable 229,250 509,086 5,166 743,502 Investments 136,243 7,216 — 143,459 Pharmaceutical inventory — 43,334 — 43,334 Goodwill 478,227 395,552 — 873,779 Other intangible assets, net 39,446 40,243 — 79,689 (1) Stock compensation expense, changes in the fair value of contingent consideration recorded in relation to the 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) Identifiable assets by business segment are those assets that are used in the operations of each segment. The remainder of the Company’s assets cannot be specifically identified by segment. |
Schedule of reconciliation of Segment Profit to income before income taxes | 2018 2019 2020 Income (loss) from continuing operations before income taxes $ 33,633 $ 21,759 $ (40,485) Stock compensation expense 28,936 24,673 25,172 Changes in fair value of contingent consideration 1,108 — — Depreciation and amortization 112,284 110,367 98,387 Interest expense 35,180 35,868 30,865 Interest and other income (4,884) (6,857) (4,054) Special charges — — 34,078 Segment Profit from continuing operations $ 206,257 $ 185,810 $ 143,963 |
Selected Quarterly Financial _2
Selected Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Selected Quarterly Financial Data (Unaudited) | |
Summary of unaudited quarterly results of operations | For the Quarter Ended March 31, June 30, September 30, December 31, 2019 2019 2019 2019 Year Ended December 31, 2019 Net revenue: Managed care and other $ 566,548 $ 608,614 $ 591,229 $ 580,544 PBM and dispensing 552,458 545,675 567,314 553,231 Total net revenue 1,119,006 1,154,289 1,158,543 1,133,775 Costs and expenses: Cost of care 369,097 408,911 397,697 367,819 Cost of goods sold 526,314 501,081 523,973 507,917 Direct service costs and other operating expenses (1) 202,300 195,907 195,844 207,616 Depreciation and amortization 25,417 28,191 28,890 27,869 Interest expense 9,037 9,070 8,935 8,826 Interest and other income (1,759) (1,821) (1,699) (1,578) Special charges — — — — Total costs and expenses 1,130,406 1,141,339 1,153,640 1,118,469 Income (loss) from continuing operations before income taxes (11,400) 12,950 4,903 15,306 Provision (benefit) for income taxes (3,209) 5,735 782 5,854 Net income (loss) from continuing operations (8,191) 7,215 4,121 9,452 Income from discontinued operations, net of tax 8,622 6,398 17,153 11,132 Net Income $ 431 $ 13,613 $ 21,274 $ 20,584 Weighted average number of common shares outstanding—basic 23,946 24,101 24,426 24,491 Weighted average number of common shares outstanding—diluted 24,213 24,416 24,708 24,905 Net income (loss) per common share—basic: Continuing operations $ (0.34) $ 0.30 $ 0.17 $ 0.39 Discontinued operations 0.36 0.26 0.70 0.45 Consolidated operations $ 0.02 $ 0.56 $ 0.87 $ 0.84 Net income (loss) per common share—diluted: Continuing operations $ (0.34) $ 0.30 $ 0.17 $ 0.38 Discontinued operations 0.36 0.26 0.69 0.45 Consolidated operations $ 0.02 $ 0.56 $ 0.86 $ 0.83 For the Quarter Ended March 31, June 30, September 30, December 31, 2020 2020 2020 2020 Year Ended December 31, 2020 Net revenue: Managed care and other $ 553,168 $ 548,711 $ 568,688 $ 579,454 PBM and dispensing 569,211 551,364 601,429 605,506 Total net revenue 1,122,379 1,100,075 1,170,117 1,184,960 Costs and expenses: Cost of care 349,108 321,831 364,438 362,478 Cost of goods sold 533,241 528,067 560,269 559,140 Direct service costs and other operating expenses (2) 204,241 199,756 216,770 259,401 Depreciation and amortization 23,358 23,888 24,730 26,411 Interest expense 8,958 7,995 7,286 6,626 Interest and other income (1,219) (551) (349) (1,935) Special charges — 8,309 16,599 9,170 Total costs and expenses 1,117,687 1,089,295 1,189,743 1,221,291 Income (loss) from continuing operations before income taxes 4,692 10,780 (19,626) (36,331) Provision (benefit) for income taxes 5,762 (36,328) (2,330) (11,635) Net income (loss) from continuing operations (1,070) 47,108 (17,296) (24,696) Income from discontinued operations, net of tax 19,320 36,397 28,943 293,629 Net Income $ 18,250 $ 83,505 $ 11,647 $ 268,933 . Weighted average number of common shares outstanding—basic 24,728 25,054 25,448 25,781 Weighted average number of common shares outstanding—diluted 24,869 25,278 25,448 25,781 Net income (loss) per common share—basic: Continuing operations $ (0.04) $ 1.88 $ (0.68) $ (0.96) Discontinued operations 0.78 1.45 1.14 11.39 Consolidated operations $ 0.74 $ 3.33 $ 0.46 $ 10.43 Net income (loss) per common share—diluted: Continuing operations $ (0.04) $ 1.86 $ (0.68) $ (0.96) Discontinued operations 0.78 1.44 1.14 11.39 Consolidated operations $ 0.74 $ 3.30 $ 0.46 $ 10.43 (1) Includes stock compensation expense of $9,400, $5,207 , $4,604 and $5,462 for the quarters ended March 31, June 30, September 30 and December 31, 2019, respectively. (2) Includes stock compensation expense of $5,797, $6,592, $5,442 and $7,341 for the quarters ended March 31, June 30, September 30 and December 31, 2020, respectively. |
General - Discontinued Operatio
General - Discontinued Operations (Details) - MCC Business - USD ($) $ in Millions | Dec. 31, 2020 | Apr. 30, 2020 |
Discontinued Operations, Disposed of by Sale | ||
Discontinued Operations | ||
Disposal Group, Including Discontinued Operation, Consideration | $ 850 | |
Disposal Group, Including Discontinued Operation, Consideration, Closing Adjustments | $ 158 | |
Discontinued Operations, Held-for-sale | ||
Discontinued Operations | ||
Disposal Group, Including Discontinued Operation, Consideration | $ 850 |
General - Business Overview (De
General - Business Overview (Details) - Healthcare - segment | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
General | |||
Number of reporting units, before discontinued operation | 2 | 2 | 2 |
Number of reporting units | 1 | 1 | 1 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Recent Accounting Pronouncements - General Information (Details) | Dec. 31, 2020 |
Accounting Standards Update 2016-13 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Change in Accounting Principle, Accounting Standards Update, Adopted | true |
Change in Accounting Principle, Accounting Standards Update, Early Adoption | false |
Change in Accounting Principle, Accounting Standards Update, Adoption Date | Jan. 1, 2020 |
Accounting Standards Update 2017-04 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Change in Accounting Principle, Accounting Standards Update, Adopted | true |
Change in Accounting Principle, Accounting Standards Update, Adoption Date | Jan. 1, 2020 |
Accounting Standards Update 2018-15 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Change in Accounting Principle, Accounting Standards Update, Adopted | true |
Change in Accounting Principle, Accounting Standards Update, Adoption Date | Jan. 1, 2020 |
Accounting Standards Update 2019-12 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Change in Accounting Principle, Accounting Standards Update, Adopted | false |
Change in Accounting Principle, Accounting Standards Update, Early Adoption | false |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Operating results by business segment | |||||||||||
Net revenue | $ 1,184,960 | $ 1,170,117 | $ 1,100,075 | $ 1,122,379 | $ 1,133,775 | $ 1,158,543 | $ 1,154,289 | $ 1,119,006 | $ 4,577,531 | $ 4,565,613 | $ 4,957,522 |
Transferred at a point in time | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 2,327,510 | 2,218,678 | 2,606,946 | ||||||||
Transferred over time | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 2,250,021 | 2,346,935 | 2,350,576 | ||||||||
Government | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 1,756,819 | 1,748,215 | 1,846,121 | ||||||||
Non-government | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 2,820,712 | 2,817,398 | 3,111,401 | ||||||||
Behavioral & Specialty Health, risk-based, non-EAP | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 1,399,144 | 1,504,182 | 1,511,269 | ||||||||
Behavioral & Specialty Health, EAP risk-based | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 315,306 | 339,377 | 349,751 | ||||||||
Behavioral & Specialty Health, ASO | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 291,608 | 278,285 | 283,259 | ||||||||
PBM, including dispensing | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 2,083,766 | 1,931,074 | 2,164,680 | ||||||||
Medicare Part D | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 243,744 | 287,604 | 442,266 | ||||||||
PBA | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 136,155 | 137,885 | 132,112 | ||||||||
Formulary management | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 104,891 | 84,567 | 70,900 | ||||||||
Other service lines | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 2,917 | 2,639 | 3,285 | ||||||||
Healthcare | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 1,959,869 | 2,082,088 | 2,110,756 | ||||||||
Healthcare | Transferred over time | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 1,959,869 | 2,082,088 | 2,110,756 | ||||||||
Healthcare | Government | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 935,138 | 916,542 | 899,515 | ||||||||
Healthcare | Non-government | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 1,024,731 | 1,165,546 | 1,211,241 | ||||||||
Healthcare | Behavioral & Specialty Health, risk-based, non-EAP | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 1,399,532 | 1,504,472 | 1,511,532 | ||||||||
Healthcare | Behavioral & Specialty Health, EAP risk-based | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 315,306 | 339,377 | 349,751 | ||||||||
Healthcare | Behavioral & Specialty Health, ASO | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 245,031 | 238,239 | 249,473 | ||||||||
Pharmacy Management | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 2,638,301 | 2,502,268 | 2,865,844 | ||||||||
Pharmacy Management | Transferred at a point in time | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 2,347,446 | 2,236,829 | 2,625,417 | ||||||||
Pharmacy Management | Transferred over time | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 290,855 | 265,439 | 240,427 | ||||||||
Pharmacy Management | Government | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 821,681 | 831,673 | 946,606 | ||||||||
Pharmacy Management | Non-government | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 1,816,620 | 1,670,595 | 1,919,238 | ||||||||
Pharmacy Management | Behavioral & Specialty Health, ASO | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 46,892 | 40,348 | 34,130 | ||||||||
Pharmacy Management | PBM, including dispensing | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 2,103,702 | 1,949,225 | 2,183,151 | ||||||||
Pharmacy Management | Medicare Part D | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 243,744 | 287,604 | 442,266 | ||||||||
Pharmacy Management | PBA | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 136,155 | 137,885 | 132,112 | ||||||||
Pharmacy Management | Formulary management | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 104,891 | 84,567 | 70,900 | ||||||||
Pharmacy Management | Other service lines | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 2,917 | 2,639 | 3,285 | ||||||||
Elimination | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | (20,639) | (18,743) | (19,078) | ||||||||
Elimination | Transferred at a point in time | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | (19,936) | (18,151) | (18,471) | ||||||||
Elimination | Transferred over time | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | (703) | (592) | (607) | ||||||||
Elimination | Non-government | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | (20,639) | (18,743) | (19,078) | ||||||||
Elimination | Behavioral & Specialty Health, risk-based, non-EAP | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | (388) | (290) | (263) | ||||||||
Elimination | Behavioral & Specialty Health, ASO | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | (315) | (302) | (344) | ||||||||
Elimination | PBM, including dispensing | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | $ (19,936) | $ (18,151) | $ (18,471) |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Per Member Per Month Revenue (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Operating results by business segment | |
Required notice to terminate PMPM contract | 30 days |
Minimum | |
Operating results by business segment | |
Term of PMPM contract | 1 year |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Pharmacy Benefit Management Revenue (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Minimum | |
Operating results by business segment | |
Expected term of PBM relationship | 1 year |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Pharmacy Benefit Administration Revenue (Details) | 12 Months Ended |
Dec. 31, 2020 | |
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 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Formulary Management Revenue (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Minimum | |
Operating results by business segment | |
Term of formulary management contract | 1 year |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Accounts Receivable, Contract Assets and Contract Liabilities - Tabular Disclosure (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Summary of Significant Accounting Policies | ||
Accounts receivable | $ 799,803 | $ 717,455 |
Change in accounts receivable | $ 82,348 | |
Change in accounts receivable (as a percent) | 11.50% | |
Contract assets | $ 3,566 | 2,162 |
Change in contract assets | $ 1,404 | |
Change in contract assets (as a percent) | 64.90% | |
Contract liabilities - current | $ 6,772 | 6,728 |
Change in contract liabilities - current | $ 44 | |
Change in contract liabilities - current (as a percent) | 0.70% | |
Contract liabilities - long-term | $ 11,073 | $ 11,099 |
Change in contract liabilities - long-term | $ (26) | |
Change in contract liabilities - long-term (as a percent) | (0.20%) |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Accounts Receivable, Contract Assets and Contract Liabilities - Additional Information (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Contract liabilities | |
Revenue recognized previously included in current contract liabilities | $ 6.7 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Accounts Receivable, Contract Assets and Contract Liabilities - Performance Obligation (Details) $ in Millions | Dec. 31, 2020USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Performance obligation | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months |
Estimated revenue to be recognized | $ 6.8 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Performance obligation | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months |
Estimated revenue to be recognized | $ 3.5 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Performance obligation | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months |
Estimated revenue to be recognized | $ 3.2 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Performance obligation | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 0 months |
Estimated revenue to be recognized | $ 4.3 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Customers Exceeding Ten Percent of Consolidated Net Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Significant customers | |||||||||||
Revenue from Contract with Customer, Including Assessed Tax | $ 1,184,960 | $ 1,170,117 | $ 1,100,075 | $ 1,122,379 | $ 1,133,775 | $ 1,158,543 | $ 1,154,289 | $ 1,119,006 | $ 4,577,531 | $ 4,565,613 | $ 4,957,522 |
Discontinued Operations, Held-for-sale | |||||||||||
Significant customers | |||||||||||
Managed care and other revenue | 2,757,511 | ||||||||||
MCC Business | Discontinued Operations, Held-for-sale | |||||||||||
Significant customers | |||||||||||
Managed care and other revenue | 2,529,386 | ||||||||||
Maximum | |||||||||||
Significant customers | |||||||||||
Term of contracts with customers | 3 years | ||||||||||
Term of contract extensions or renewals | 2 years | ||||||||||
Virginia Contracts | |||||||||||
Significant customers | |||||||||||
Revenue from Contract with Customer, Including Assessed Tax | $ 1,013,200 | 847,800 | 476,700 | ||||||||
New York Contract | |||||||||||
Significant customers | |||||||||||
Revenue from Contract with Customer, Including Assessed Tax | 756,400 | 836,400 | 691,600 | ||||||||
Massachusetts Contracts | |||||||||||
Significant customers | |||||||||||
Revenue from Contract with Customer, Including Assessed Tax | $ 709,200 | $ 718,900 | $ 682,100 |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Customers Exceeding Ten Percent of Segment Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Significant customers | |||||||||||
Revenues | $ 1,184,960 | $ 1,170,117 | $ 1,100,075 | $ 1,122,379 | $ 1,133,775 | $ 1,158,543 | $ 1,154,289 | $ 1,119,006 | $ 4,577,531 | $ 4,565,613 | $ 4,957,522 |
Healthcare | |||||||||||
Significant customers | |||||||||||
Revenues | 1,959,869 | 2,082,088 | 2,110,756 | ||||||||
Healthcare | Customer A | |||||||||||
Significant customers | |||||||||||
Revenues | 344,988 | 324,321 | 308,649 | ||||||||
Healthcare | Customer B | |||||||||||
Significant customers | |||||||||||
Revenues | 198,199 | 199,036 | 169,508 | ||||||||
Pharmacy Management | |||||||||||
Significant customers | |||||||||||
Revenues | 2,638,301 | 2,502,268 | 2,865,844 | ||||||||
Pharmacy Management | Customer C | |||||||||||
Significant customers | |||||||||||
Revenues | $ 358,236 | $ 335,682 | $ 344,479 |
Summary of Significant Accou_15
Summary of Significant Accounting Policies - Concentration of Business (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Significant customers | |||||||||||
Net revenue | $ 1,184,960 | $ 1,170,117 | $ 1,100,075 | $ 1,122,379 | $ 1,133,775 | $ 1,158,543 | $ 1,154,289 | $ 1,119,006 | $ 4,577,531 | $ 4,565,613 | $ 4,957,522 |
Accounts receivable, net | $ 743,502 | $ 680,569 | $ 743,502 | 680,569 | 657,734 | ||||||
Minimum | |||||||||||
Significant customers | |||||||||||
Term of contracts with customers | 1 year | ||||||||||
Term of contract extensions or renewals | 1 year | ||||||||||
Notice period for termination of contract | 30 days | ||||||||||
Maximum | |||||||||||
Significant customers | |||||||||||
Term of contracts with customers | 3 years | ||||||||||
Term of contract extensions or renewals | 2 years | ||||||||||
Notice period for termination of contract | 180 days | ||||||||||
Pennsylvania Counties | |||||||||||
Significant customers | |||||||||||
Net revenue | $ 583,000 | 537,800 | 544,600 | ||||||||
CMS | |||||||||||
Significant customers | |||||||||||
Net revenue | 243,700 | 287,600 | 442,300 | ||||||||
United States federal government | |||||||||||
Significant customers | |||||||||||
Net revenue | $ 273,000 | $ 299,200 | $ 308,700 |
Summary of Significant Accou_16
Summary of Significant Accounting Policies - Health Care Reform (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Summary of Significant Accounting Policies | |
HIF fees | $ 36.2 |
HIF fees, continuing operations | $ 12.4 |
Summary of Significant Accou_17
Summary of Significant Accounting Policies - Cash And Cash Equivalents (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Cash and Cash Equivalents | ||
Book overdrafts | $ 0 | $ 0.5 |
Excess capital and undistributed earnings for regulated subsidiaries included in cash and cash equivalents | $ 35 |
Summary of Significant Accou_18
Summary of Significant Accounting Policies - Restricted Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Restricted Assets | |||
Restricted cash and cash equivalents | $ 49,227 | $ 51,253 | $ 56,211 |
Restricted short-term investments | 88,867 | 82,772 | |
Restricted deposits (included in other current assets) | 43,547 | 36,215 | |
Restricted long-term investments | 1,026 | 2,307 | |
Total | $ 182,667 | $ 172,547 | |
Equity in restricted net assets of consolidated subsidiaries as a percentage of consolidated stockholders' equity (as a percent) | 9.30% |
Summary of Significant Accou_19
Summary of Significant Accounting Policies - Fair Value Measurements - Assets - Tabular Disclosure (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Assets | |||
Investments | $ 143,459 | $ 101,661 | $ 98,878 |
Cash held in bank accounts | 464,900 | 4,700 | |
U.S. Government and agency securities | |||
Assets | |||
Investments | 42,399 | 30,775 | |
Corporate debt securities | |||
Assets | |||
Investments | 99,749 | 69,581 | |
Certificates of deposit | |||
Assets | |||
Investments | 1,311 | 1,305 | |
Fair Value, Recurring | |||
Assets | |||
Cash and cash equivalents | 679,554 | 111,085 | |
Total assets held at fair value | 823,013 | 212,746 | |
Fair Value, Recurring | U.S. Government and agency securities | |||
Assets | |||
Investments | 42,399 | 30,775 | |
Fair Value, Recurring | Corporate debt securities | |||
Assets | |||
Investments | 99,749 | 69,581 | |
Fair Value, Recurring | Certificates of deposit | |||
Assets | |||
Investments | 1,311 | 1,305 | |
Fair Value, Recurring | Level 1 | |||
Assets | |||
Total assets held at fair value | 42,399 | 30,775 | |
Fair Value, Recurring | Level 1 | U.S. Government and agency securities | |||
Assets | |||
Investments | 42,399 | 30,775 | |
Fair Value, Recurring | Level 2 | |||
Assets | |||
Cash and cash equivalents | 679,554 | 111,085 | |
Total assets held at fair value | 780,614 | 181,971 | |
Fair Value, Recurring | Level 2 | Corporate debt securities | |||
Assets | |||
Investments | 99,749 | 69,581 | |
Fair Value, Recurring | Level 2 | Certificates of deposit | |||
Assets | |||
Investments | $ 1,311 | $ 1,305 |
Summary of Significant Accou_20
Summary of Significant Accounting Policies - Fair Value Measurements - Assets - Additional Information (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Summary of Significant Accounting Policies | ||
Cash held in bank accounts | $ 464.9 | $ 4.7 |
Summary of Significant Accou_21
Summary of Significant Accounting Policies - Fair Value Measurements - Assets - Transfers (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Fair value transfers | ||
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount | $ 0 | $ 0 |
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount | 0 | 0 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3 | 0 | 0 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3 | $ 0 | $ 0 |
Summary of Significant Accou_22
Summary of Significant Accounting Policies - Fair Value Measurements - Debt (Details) $ in Millions | Dec. 31, 2020USD ($) |
Level 1 | Senior Notes | 4.400% Senior Notes due 2024 | |
Debt | |
Fair value of debt | $ 381.7 |
Level 2 | Unsecured Debt | 2017 Credit Agreement, senior unsecured term loan facility | |
Debt | |
Fair value of debt | $ 263.1 |
Summary of Significant Accou_23
Summary of Significant Accounting Policies - Investments - Realized Gains or Losses (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Realized gains or losses | |||
Realized gains or losses | $ 0 | $ 0 | $ 0 |
Summary of Significant Accou_24
Summary of Significant Accounting Policies - Investments - Amortized Cost (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Amortized cost | |||
Amortized Cost | $ 143,561 | $ 101,599 | |
Gross Unrealized Gains | 14 | 78 | |
Gross Unrealized Losses | (116) | (16) | |
Estimated Fair Value | 143,459 | 101,661 | $ 98,878 |
U.S. Government and agency securities | |||
Amortized cost | |||
Amortized Cost | 42,389 | 30,742 | |
Gross Unrealized Gains | 11 | 38 | |
Gross Unrealized Losses | (1) | (5) | |
Estimated Fair Value | 42,399 | 30,775 | |
Corporate debt securities | |||
Amortized cost | |||
Amortized Cost | 99,861 | 69,552 | |
Gross Unrealized Gains | 3 | 40 | |
Gross Unrealized Losses | (115) | (11) | |
Estimated Fair Value | 99,749 | 69,581 | |
Certificates of deposit | |||
Amortized cost | |||
Amortized Cost | 1,311 | 1,305 | |
Estimated Fair Value | $ 1,311 | $ 1,305 |
Summary of Significant Accou_25
Summary of Significant Accounting Policies - Investments by Maturity Date (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Amortized Cost | |||
2021 | $ 140,950 | ||
2022 | 2,611 | ||
Amortized Cost | 143,561 | $ 101,599 | |
Estimated Fair Value | |||
2021 | 140,847 | ||
2022 | 2,612 | ||
Estimated Fair Value | $ 143,459 | $ 101,661 | $ 98,878 |
Summary of Significant Accou_26
Summary of Significant Accounting Policies - Property and Equipment - Useful Lives (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Building improvements | Minimum | |
Property and Equipment | |
Estimated useful lives of assets | 2 years |
Building improvements | Maximum | |
Property and Equipment | |
Estimated useful lives of assets | 10 years |
Equipment | Minimum | |
Property and Equipment | |
Estimated useful lives of assets | 3 years |
Equipment | Maximum | |
Property and Equipment | |
Estimated useful lives of assets | 15 years |
Capitalized internal-use software | Minimum | |
Property and Equipment | |
Estimated useful lives of assets | 3 years |
Capitalized internal-use software | Maximum | |
Property and Equipment | |
Estimated useful lives of assets | 5 years |
Summary of Significant Accou_27
Summary of Significant Accounting Policies - Property and Equipment - Capitalized Internal-use Software (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Capitalized internal-use software | ||
Property and Equipment | ||
Property and equipment, net | $ 88.3 | $ 69.2 |
Summary of Significant Accou_28
Summary of Significant Accounting Policies - Property and Equipment - Depreciation expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Depreciation expense | |||
Depreciation expense | $ 58.4 | $ 71.4 | $ 78.4 |
Capitalized internal-use software | |||
Depreciation expense | |||
Depreciation expense | $ 36.2 | $ 46.7 | $ 50 |
Summary of Significant Accou_29
Summary of Significant Accounting Policies - Property and Equipment - Tabular Disclosure (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Property and Equipment | ||
Property and equipment, gross | $ 870,190 | $ 831,127 |
Accumulated depreciation | (733,451) | (699,415) |
Property and equipment, net | 136,739 | 131,712 |
Building improvements | ||
Property and Equipment | ||
Property and equipment, before depreciation | 12,027 | 17,726 |
Equipment | ||
Property and Equipment | ||
Property and equipment, before depreciation | 188,954 | 188,611 |
Finance lease, right-of-use asset, before accumulated amortization | 32,568 | 26,856 |
Property | ||
Property and Equipment | ||
Finance lease, right-of-use asset, before accumulated amortization | 10,455 | 26,945 |
Capitalized internal-use software | ||
Property and Equipment | ||
Property and equipment, before depreciation | $ 626,186 | $ 570,989 |
Summary of Significant Accou_30
Summary of Significant Accounting Policies - Goodwill - Reporting Units (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Goodwill | |||
Goodwill | $ 873,779 | $ 806,421 | $ 806,421 |
Behavioral & Specialty Health | |||
Goodwill | |||
Goodwill | $ 478,227 | $ 410,869 | |
Reporting Unit, Name of Segment | mgln:HealthcareSegmentMember | mgln:HealthcareSegmentMember | |
Pharmacy Management | |||
Goodwill | |||
Goodwill | $ 395,552 | $ 395,552 | |
Reporting Unit, Name of Segment | mgln:PharmacyManagementMember | mgln:PharmacyManagementMember |
Summary of Significant Accou_31
Summary of Significant Accounting Policies - Goodwill - Roll Forward (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Goodwill | |
Balance as of beginning of period | $ 806,421 |
Other acquisitions and measurement period adjustments | 67,358 |
Balance as of end of period | $ 873,779 |
Summary of Significant Accou_32
Summary of Significant Accounting Policies - Intangible Assets - Useful Lives (Details) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Customer agreements and lists | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Period of amortization of intangible assets acquired | 2 years 6 months | 2 years 6 months |
Customer agreements and lists | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Period of amortization of intangible assets acquired | 18 years | 18 years |
Customer agreements and lists | Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Avg, Remaining Useful Life | 4 years 8 months 12 days | 3 years 3 months 18 days |
Provider networks and other | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Period of amortization of intangible assets acquired | 1 year | 1 year |
Provider networks and other | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Period of amortization of intangible assets acquired | 16 years | 16 years |
Provider networks and other | Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Avg, Remaining Useful Life | 2 years 9 months 18 days | 2 years 3 months 18 days |
Summary of Significant Accou_33
Summary of Significant Accounting Policies - Intangible Assets - Finite-lived (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Finite-lived intangible assets | ||
Accumulated Amortization | $ (326,865) | $ (286,118) |
Customer agreements and lists | ||
Finite-lived intangible assets | ||
Gross Carrying Amount | 380,853 | 347,033 |
Accumulated Amortization | (306,173) | (267,977) |
Net Carrying Amount | 74,680 | 79,056 |
Provider networks and other | ||
Finite-lived intangible assets | ||
Gross Carrying Amount | 24,151 | 20,760 |
Accumulated Amortization | (20,692) | (18,141) |
Net Carrying Amount | $ 3,459 | $ 2,619 |
Summary of Significant Accou_34
Summary of Significant Accounting Policies - Intangible Assets - Indefinite-lived (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Indefinite-lived intangible assets | |
Trade names and licenses | $ 1,550 |
Summary of Significant Accou_35
Summary of Significant Accounting Policies - Intangible Assets - Total (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Intangible assets | |||
Gross Carrying Amount | $ 406,554 | $ 367,793 | |
Accumulated Amortization | (326,865) | (286,118) | |
Intangible Assets, Net (Excluding Goodwill), Total | $ 79,689 | $ 81,675 | $ 128,132 |
Summary of Significant Accou_36
Summary of Significant Accounting Policies - Intangible Assets - Amortization Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |||
Amortization expense | $ 40 | $ 38.9 | $ 34 |
Summary of Significant Accou_37
Summary of Significant Accounting Policies - Intangible Assets - Estimated Future Amortization Expense (Details) $ in Millions | Dec. 31, 2020USD ($) |
Estimated amortization expense in future | |
2020 | $ 30.5 |
2021 | 17.8 |
2022 | 9.3 |
2023 | 5.8 |
2024 | $ 5.1 |
Summary of Significant Accou_38
Summary of Significant Accounting Policies - Medical Claims Payable (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cost of Care, Medical Claims Payable and Other Medical Liabilities | |||||||||||
Period considered for comparing medical claims trend | 2 months | ||||||||||
Minimum completion factor of insured claims to make projection from historical completion and payment patterns (as a percent) | 70.00% | ||||||||||
Changes in medical claims payable | |||||||||||
Claims payable and IBNR, beginning of period | $ 123,276 | $ 126,311 | $ 123,276 | $ 126,311 | $ 126,861 | ||||||
Cost of care: | |||||||||||
Current year | 1,403,555 | 1,545,024 | 1,555,491 | ||||||||
Prior years | (5,700) | (1,500) | (800) | ||||||||
Total cost of care | $ 362,478 | $ 364,438 | $ 321,831 | $ 349,108 | $ 367,819 | $ 397,697 | $ 408,911 | $ 369,097 | 1,397,855 | 1,543,524 | 1,554,691 |
Claim payments and transfers to other medical liabilities: | |||||||||||
Current year | 1,306,519 | 1,433,214 | 1,441,621 | ||||||||
Prior years | 107,241 | 113,345 | 113,620 | ||||||||
Total claim payments and transfers to other medical liabilities | 1,413,760 | 1,546,559 | 1,555,241 | ||||||||
Claims payable and IBNR, end of period | 107,371 | 123,276 | 107,371 | 123,276 | 126,311 | ||||||
Withhold (receivables), end of period | 3,418 | ||||||||||
Withhold payable, end of period | 4,480 | 4,838 | 4,480 | 4,838 | |||||||
Medical claims payable, end of period | $ 111,851 | $ 128,114 | $ 111,851 | $ 128,114 | $ 129,729 |
Summary of Significant Accou_39
Summary of Significant Accounting Policies - Leases - General Information (Details) | 12 Months Ended |
Dec. 31, 2020item | |
Leases | |
Renewal terms | true |
Minimum | |
Leases | |
Options to renew | 1 |
Options to extend the lease renewal terms | 1 year |
Maximum | |
Leases | |
Options to extend the lease renewal terms | 10 years |
Summary of Significant Accou_40
Summary of Significant Accounting Policies - Leases - Lease Expenses (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Components of leases expenses: | |
Operating lease cost | $ 9,506 |
Amortization of right-of-use asset | 3,419 |
Interest on lease liabilities | 785 |
Total finance lease cost | 4,204 |
Short-term lease cost | 298 |
Variable lease cost | 2,656 |
Total lease cost | 16,664 |
Sublease income | (258) |
Net lease cost | $ 16,406 |
Summary of Significant Accou_41
Summary of Significant Accounting Policies - Leases - Assets and Liabilities (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Components of lease assets and liabilities | |
Operating lease right-of-use assets | $ 23,545 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position | us-gaap:OtherAssetsNoncurrent |
Current operating lease liabilities | $ 14,526 |
Operating Lease, Liability, Current, Statement of Financial Position | us-gaap:AccruedLiabilitiesCurrent |
Long-term operating lease liabilities | $ 24,923 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position | us-gaap:DeferredCreditsAndOtherLiabilitiesNoncurrent |
Total operating lease liabilities | $ 39,449 |
Operating Lease, Liability, Statement of Financial Position | us-gaap:AccruedLiabilitiesCurrent us-gaap:DeferredCreditsAndOtherLiabilitiesNoncurrent |
Finance lease assets | $ 11,892 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position | us-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortization |
Current finance lease liabilities | $ 4,460 |
Finance Lease, Liability, Current, Statement of Financial Position | us-gaap:LongTermDebtAndCapitalLeaseObligationsCurrent |
Long-term finance lease liabilities | $ 11,967 |
Finance Lease, Liability, Noncurrent, Statement of Financial Position | us-gaap:LongTermDebtAndCapitalLeaseObligations |
Total finance lease liabilities | $ 16,427 |
Total lease liabilities | $ 55,876 |
Summary of Significant Accou_42
Summary of Significant Accounting Policies - Leases - Maturity Dates (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Leases | |
2020 | $ 19,535 |
2021 | 14,883 |
2022 | 10,349 |
2023 | 8,557 |
2024 | 3,228 |
2025 and beyond | 673 |
Total lease payments | $ 57,225 |
Summary of Significant Accou_43
Summary of Significant Accounting Policies - Leases - Gross Difference (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Leases | |
Total lease payments | $ 57,225 |
Less interest | (1,349) |
Present value of lease liabilities | $ 55,876 |
Summary of Significant Accou_44
Summary of Significant Accounting Policies - Leases - Weighted Average Remaining Lease Term and Discount Rate (Details) | Dec. 31, 2020 |
Leases | |
Weighted average remaining lease term, operating leases | 3 years 11 months 8 days |
Weighted average remaining lease term, finance leases | 3 years 11 months 15 days |
Weighted average discount rate, operating leases | 4.79% |
Weighted average discount rate, finance leases | 4.39% |
Summary of Significant Accou_45
Summary of Significant Accounting Policies - Leases - Supplemental Cash Flow Information (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Leases | |
Operating cash flows from operating leases | $ 12,268 |
Operating cash flows from finance leases | 5,401 |
Financing cash flows from finance leases | 785 |
Right-of-use asset obtained in exchange for new lease obligation, operating leases | 1,677 |
Right-of-use asset obtained in exchange for new lease obligation, finance leases | $ 3,599 |
Summary of Significant Accou_46
Summary of Significant Accounting Policies - Accrued Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Accrued Liabilities | ||
Accrued employee compensation liabilities | $ 106.7 | |
Accrued customer settlement liabilities | 41.1 | $ 21.4 |
State and federal income tax liabilities | 56.6 | |
Accounts payable rebates | $ 101.7 | $ 51 |
Summary of Significant Accou_47
Summary of Significant Accounting Policies - Stock Compensation - Stock Compensation Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Stock Compensation | |||
Stock compensation expense | $ 25.5 | $ 29.5 | $ 39.1 |
Minimum | |||
Stock Compensation | |||
Estimated forfeitures (as a percent) | 0.00% | 0.00% | 0.00% |
Maximum | |||
Stock Compensation | |||
Estimated forfeitures (as a percent) | 4.00% | 4.00% | 4.00% |
Summary of Significant Accou_48
Summary of Significant Accounting Policies - Stock Compensation - Vesting Periods (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Stock Options | |
Stock Compensation | |
Vesting period | 3 years |
Restricted Stock Units (RSUs) | |
Stock Compensation | |
Vesting period | 3 years |
Performance Based Restricted Stock Units ("PSUs") | |
Stock Compensation | |
Vesting period | 3 years |
Summary of Significant Accou_49
Summary of Significant Accounting Policies - Redeemable Non-controlling Interest (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Redeemable Non-controlling Interest | |
Noncontrolling interest, put option, purchase remaining shares, percentage (as a percent) | 33.30% |
Noncontrolling interest, call option, purchase remaining shares, percentage (as a percent) | 33.30% |
Redeemable non-controlling interest | $ 33,062 |
Aurelia Health, LLC | |
Redeemable Non-controlling Interest | |
Equity interest (as a percent) | 70.00% |
Acquisitions - General Informat
Acquisitions - General Information (Details) - Aurelia Health, LLC $ in Millions | Dec. 21, 2020USD ($) |
Date of Acquisition | |
Business Acquisition, Date of Acquisition Agreement | Dec. 18, 2020 |
Business Acquisition, Effective Date of Acquisition | Dec. 21, 2020 |
Description | |
Percentage of equity interest acquired (as a percent) | 70.00% |
Consideration Transferred | |
Base purchase price | $ 78.4 |
Acquisitions - Identified Intan
Acquisitions - Identified Intangible Assets Acquired (Details) $ in Thousands | Dec. 21, 2020USD ($) |
Aurelia Health, LLC | |
Identified Intangible Assets | |
Identified intangible assets | $ 38,011 |
Acquisitions - Finite-lived Int
Acquisitions - Finite-lived Intangible Assets Acquired (Details) - Aurelia Health, LLC $ in Millions | Dec. 21, 2020USD ($) |
Customer contracts | |
Finite-lived Intangible Assets Acquired | |
Finite-live intangible assets acquired | $ 33.8 |
Period of amortization of intangible assets acquired | 10 years |
Non-compete agreements | |
Finite-lived Intangible Assets Acquired | |
Finite-live intangible assets acquired | $ 2.4 |
Non-compete agreements | Minimum | |
Finite-lived Intangible Assets Acquired | |
Period of amortization of intangible assets acquired | 2 years |
Non-compete agreements | Maximum | |
Finite-lived Intangible Assets Acquired | |
Period of amortization of intangible assets acquired | 5 years |
Payer contracts | |
Finite-lived Intangible Assets Acquired | |
Finite-live intangible assets acquired | $ 0.2 |
Period of amortization of intangible assets acquired | 2 years |
Acquisitions - Indefinite-lived
Acquisitions - Indefinite-lived Intangible Assets Acquired (Details) $ in Millions | Dec. 21, 2020USD ($) |
Aurelia Health, LLC | |
Indefinite-lived Intangible Assets Acquired | |
Indefinite-lived intangible assets acquired | $ 1.6 |
Acquisitions - Goodwill (Detail
Acquisitions - Goodwill (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 21, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Acquisitions | ||||
Goodwill | $ 873,779 | $ 806,421 | $ 806,421 | |
Aurelia Health, LLC | ||||
Acquisitions | ||||
Goodwill | $ 67,358 |
Acquisitions - Fair Value of As
Acquisitions - Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 21, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Assets acquired: | ||||
Goodwill | $ 873,779 | $ 806,421 | $ 806,421 | |
Aurelia Health, LLC | ||||
Assets acquired: | ||||
Cash | $ 330 | |||
Accounts receivable | 7,189 | |||
Current assets | 9,974 | |||
Property and equipment, net | 699 | |||
Other assets | 3,182 | |||
Identified intangible assets | 38,011 | |||
Goodwill | 67,358 | |||
Total assets acquired | 119,224 | |||
Liabilities assumed: | ||||
Current liabilities | 1,825 | |||
Other liabilities | 4,294 | |||
Total liabilities assumed | 6,119 | |||
Net assets acquired | 113,105 | |||
Redeemable non-controlling interest | 33,006 | |||
Total Consideration | $ 80,099 |
Acquisitions - Costs (Details)
Acquisitions - Costs (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Aurelia Health, LLC | |
Business Acquisition [Line Items] | |
Acquisition related costs | $ 2 |
Benefit Plans (Details)
Benefit Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Benefit Plans | |||
Maximum contribution to defined contribution retirement plan by employee, as a percentage of compensation | 75.00% | ||
Employer's matching contribution as a percentage of employee's contribution | 50.00% | ||
Maximum employer matching contribution to defined contribution retirement plan, as a percentage of compensation | 6.00% | ||
Expense recognized | $ 18.1 | $ 15.2 | $ 14.9 |
Long-Term Debt, Finance Lease a
Long-Term Debt, Finance Lease and Deferred Financing Obligations - Senior Notes (Details) - Senior Notes - 4.400% Senior Notes due 2024 - USD ($) $ in Millions | Sep. 22, 2017 | Dec. 31, 2020 | Dec. 31, 2019 |
Debt | |||
Debt instrument, face amount | $ 400 | ||
Stated interest rate (as a percent) | 4.40% | ||
Debt instrument, repurchased face amount | $ 28.9 | $ 11.1 | |
Gain (loss) on repurchase of debt instrument | (0.7) | (0.3) | |
Long-term debt | $ 359.6 | $ 388.4 | |
Debt instrument, maturity date | Sep. 22, 2024 | ||
Redemption price of the principal amount redeemed (as a percent) | 100.00% |
Long-Term Debt, Finance Lease_2
Long-Term Debt, Finance Lease and Deferred Financing Obligations - Credit Agreement - General Information (Details) - Unsecured Debt - USD ($) $ in Millions | Aug. 13, 2018 | Aug. 12, 2018 | Sep. 27, 2017 | Sep. 22, 2017 | Dec. 31, 2020 |
2017 Credit Agreement | |||||
Debt | |||||
Debt instrument, maturity date | Sep. 22, 2023 | Sep. 22, 2022 | Sep. 22, 2022 | Sep. 22, 2023 | |
2017 Credit Agreement | Federal Funds Rate | |||||
Debt | |||||
Basis spread on variable rate (as a percent) | 0.50% | ||||
2017 Credit Agreement, senior unsecured revolving credit facility | |||||
Debt | |||||
Maximum borrowing capacity | $ 400 | ||||
Weighted average interest rate (as a percent) | 2.9686% | ||||
Interest rate (as a percent) | 2.01% | ||||
2017 Credit Agreement, senior unsecured revolving credit facility | Prime rate | |||||
Debt | |||||
Basis spread on variable rate (as a percent) | 0.50% | ||||
2017 Credit Agreement, senior unsecured revolving credit facility | Eurodollar rate for one month | |||||
Debt | |||||
Basis spread on variable rate (as a percent) | 1.00% | ||||
2017 Credit Agreement, senior unsecured revolving credit facility | Eurodollar rate for selected interest period | |||||
Debt | |||||
Basis spread on variable rate (as a percent) | 1.50% | 1.75% | |||
2017 Credit Agreement, senior unsecured term loan facility | |||||
Debt | |||||
Maximum borrowing capacity | $ 350 |
Long-Term Debt, Finance Lease_3
Long-Term Debt, Finance Lease and Deferred Financing Obligations - Credit Agreement - Contractual Maturities (Details) - Unsecured Debt - 2017 Credit Agreement, senior unsecured term loan facility $ in Millions | Dec. 31, 2020USD ($) |
Long-term Debt, Fiscal Year Maturity | |
2021 | $ 0 |
2022 | 5 |
2023 | $ 258.1 |
Long-Term Debt, Finance Lease_4
Long-Term Debt, Finance Lease and Deferred Financing Obligations - Credit Agreement - Additional Information (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Debt | ||
Deferred loan issuance cost | $ 4.2 | $ 5.7 |
Unsecured Debt | 2017 Credit Agreement, senior unsecured term loan facility | ||
Debt | ||
Borrowings outstanding | 263.1 | 280.6 |
Unsecured Debt | 2017 Credit Agreement, senior unsecured revolving credit facility | ||
Debt | ||
Borrowings outstanding | 0 | 0 |
Available borrowing capacity | $ 400 | $ 400 |
Long-Term Debt, Finance Lease_5
Long-Term Debt, Finance Lease and Deferred Financing Obligations - Letter of Credit Agreement (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Long Term Debt, Capital Lease and Deferred Financing Obligations | ||
Letters of credit outstanding | $ 32.1 | $ 66.4 |
Long-Term Debt, Finance Lease_6
Long-Term Debt, Finance Lease and Deferred Financing Obligations - Finance Lease (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Leases | |
Finance lease liability | $ 16,427 |
Gross cost of finance leased assets | $ 43,000 |
Long-Term Debt, Finance Lease_7
Long-Term Debt, Finance Lease and Deferred Financing Obligations - Deferred Financing Obligations (Details) $ in Millions | Dec. 31, 2019USD ($) |
Capital Lease Obligations | |
Capital lease obligations | $ 18.1 |
Gross Cost of Finance Lease Assets | |
Gross cost of finance leased assets | $ 53.8 |
Stockholders' Equity - Stock Co
Stockholders' Equity - Stock Compensation - Management Incentive Plan (Details) | May 18, 2016multipliershares | Dec. 31, 2020shares |
Stock Options | ||
Stock Compensation | ||
Vesting period | 3 years | |
Life of options (expiration period) | 10 years | |
Restricted Stock Units (RSUs) | ||
Stock Compensation | ||
Vesting period | 3 years | |
Performance Based Restricted Stock Units ("PSUs") | ||
Stock Compensation | ||
Vesting period | 3 years | |
2016 Management Incentive Plan | ||
Stock Compensation | ||
Maximum number of shares available (in shares) | 4,000,000 | |
Multiplier for delivery of shares under full-value awards | multiplier | 1.60 | |
Number of shares available for grant | 2,058,875 |
Stockholders' Equity - Stock _2
Stockholders' Equity - Stock Compensation - Employee Stock Purchase Plan (Details) - shares | May 24, 2018 | Dec. 31, 2020 | Dec. 31, 2019 | May 21, 2014 |
Stock Compensation | ||||
Number of shares of common stock issued under purchase plans | 64,011 | 93,632 | ||
Employee Stock | ||||
Stock Compensation | ||||
Maximum number of shares available (in shares) | 200,000 | |||
Number of additional shares issued | 300,000 | |||
Number of shares available for grant | 151,073 |
Stockholders' Equity - Stock _3
Stockholders' Equity - Stock Compensation - Options - Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Options | |||
Outstanding, beginning of period (in shares) | 2,125,861 | 2,352,609 | 2,458,237 |
Granted (in shares) | 63,771 | 429,124 | 477,956 |
Forfeited (in shares) | (102,163) | (112,120) | (174,376) |
Exercised (in shares) | (1,042,186) | (543,752) | (409,208) |
Outstanding, end of period (in shares) | 1,045,283 | 2,125,861 | 2,352,609 |
Weighted Average Exercise Price | |||
Outstanding, beginning of period (in dollars per share) | $ 69.22 | $ 68.10 | $ 61.50 |
Granted (in dollars per share) | 62.93 | 66.22 | 96.39 |
Forfeited (in dollars per share) | 75.63 | 78.18 | 80.21 |
Exercised (in dollars per share) | 61.92 | 60.16 | 56.36 |
Outstanding, end of period (in dollars per share) | $ 75.48 | $ 69.22 | $ 68.10 |
Vested and Expected to Vest | |||
Vested and expected to vest end of period (in shares) | 1,042,443 | ||
Vested and expected to vest end of period (in dollars per share) | $ 75.51 | ||
Exercisable, end of period (in shares) | 841,892 | ||
Exercisable, end of period (in dollars per share) | $ 76.41 | ||
Weighted average remaining contractual term | |||
Outstanding | 4 years 6 months 18 days | ||
Vested and expected to vest | 4 years 6 months 14 days | ||
Exercisable | 3 years 7 months 24 days | ||
Aggregate intrinsic value | |||
Outstanding | $ 12,984 | ||
Vested and expected to vest end of period | 12,936 | ||
Exercisable, end of period | $ 10,131 |
Stockholders' Equity - Stock _4
Stockholders' Equity - Stock Compensation - Options - General Information (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Stock Compensation | |||
Share price (in dollars per share) | $ 82.84 | ||
Total pre-tax intrinsic value of options exercised | $ 11.8 | $ 5.6 | $ 17.3 |
Stockholders' Equity - Stock _5
Stockholders' Equity - Stock Compensation - Options - Fair Value Assumptions (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Fair Value Assumptions | |||
Grants in period, weighted average grant date fair value (in dollars per share) | $ 18.55 | $ 20.64 | $ 25.34 |
Stock Options | |||
Fair Value Assumptions | |||
Risk-free interest rate (as a percent) | 1.06% | 2.50% | 2.54% |
Expected life | 4 years | 4 years | 4 years |
Expected volatility (as a percent) | 35.56% | 35.56% | 28.20% |
Expected dividend yield (as a percent) | 0.00% | 0.00% | 0.00% |
Stockholders' Equity - Stock _6
Stockholders' Equity - Stock Compensation - Options - Unrecognized Stock Compensation Expense (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Stock Compensation | |
Unrecognized compensation expense, options | $ 2.3 |
Aggregate fair value of options vested | $ 6.4 |
Stock Options | |
Stock Compensation | |
Unrecognized compensation expense, period of recognition | 1 year 4 months 6 days |
Stockholders' Equity - Stock _7
Stockholders' Equity - Stock Compensation - Options - Net Tax Benefits (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Stock Compensation | |||||||||||
Provision (benefit) for income taxes | $ (11,635) | $ (2,330) | $ (36,328) | $ 5,762 | $ 5,854 | $ 782 | $ 5,735 | $ (3,209) | $ (44,531) | $ 9,162 | $ 11,457 |
Stock Options | |||||||||||
Stock Compensation | |||||||||||
Provision (benefit) for income taxes | 2,300 | 1,500 | $ (5,100) | ||||||||
Excess tax benefits of tax deductions in recognized stock compensation expenses | 2,700 | 1,800 | |||||||||
Deficiency of tax deductions in recognized stock compensation expenses | $ 400 | $ 300 |
Stockholders' Equity - Stock _8
Stockholders' Equity - Stock Compensation - Nonvested - Activity (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Restricted Stock Awards | |||
Shares | |||
Outstanding, beginning of period (in shares) | 39,761 | 11,795 | 31,102 |
Awarded (in shares) | 54,314 | 41,905 | 11,795 |
Vested (in shares) | (39,761) | (13,939) | (31,102) |
Outstanding, end of period (in shares) | 54,314 | 39,761 | 11,795 |
Weighted Average Grant Date Fair Value | |||
Outstanding, beginning of period (in dollars per share) | $ 65.40 | $ 89.05 | $ 68 |
Awarded (in dollars per share) | 76.72 | 65.60 | 89.05 |
Vested (in dollars per share) | 65.40 | 85.99 | 68 |
Outstanding, end of period (in dollars per share) | $ 76.72 | $ 65.40 | $ 89.05 |
Restricted Stock Units (RSUs) | |||
Shares | |||
Outstanding, beginning of period (in shares) | 256,430 | 156,750 | 163,289 |
Awarded (in shares) | 355,689 | 212,065 | 111,033 |
Vested (in shares) | (108,996) | (68,993) | (84,627) |
Forfeited (in shares) | (74,761) | (43,392) | (32,945) |
Outstanding, end of period (in shares) | 428,362 | 256,430 | 156,750 |
Weighted Average Grant Date Fair Value | |||
Outstanding, beginning of period (in dollars per share) | $ 74.12 | $ 86.68 | $ 66.46 |
Awarded (in dollars per share) | 62.48 | 67.92 | 99.29 |
Vested (in dollars per share) | 75.15 | 81.95 | 65.20 |
Forfeited (in dollars per share) | 64.79 | 76.71 | 84.17 |
Outstanding, end of period (in dollars per share) | $ 65.83 | $ 74.12 | $ 86.68 |
Performance Based Restricted Stock Units ("PSUs") | |||
Shares | |||
Outstanding, beginning of period (in shares) | 248,559 | 209,019 | 202,315 |
Awarded (in shares) | 138,114 | 101,498 | 80,502 |
Vested (in shares) | (52,861) | (43,109) | (33,592) |
Forfeited (in shares) | (54,867) | (18,849) | (40,206) |
Outstanding, end of period (in shares) | 278,945 | 248,559 | 209,019 |
Weighted Average Grant Date Fair Value | |||
Outstanding, beginning of period (in dollars per share) | $ 104.27 | $ 103.38 | $ 84.63 |
Awarded (in dollars per share) | 76.88 | 101.82 | 141.61 |
Vested (in dollars per share) | 76.24 | 97.12 | 85 |
Forfeited (in dollars per share) | 85.09 | 97.49 | 100.96 |
Outstanding, end of period (in dollars per share) | $ 99.80 | $ 104.27 | $ 103.38 |
Stockholders' Equity - Stock _9
Stockholders' Equity - Stock Compensation - Nonvested - Unrecognized Stock Compensation Expense (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Restricted Stock Awards | |
Stock Compensation | |
Unrecognized compensation expense, nonvested | $ 3.5 |
Unrecognized compensation expense, period of recognition | 2 years 6 months 25 days |
Restricted Stock Units (RSUs) | |
Stock Compensation | |
Unrecognized compensation expense, nonvested | $ 18.3 |
Unrecognized compensation expense, period of recognition | 1 year 11 months 19 days |
Performance Based Restricted Stock Units ("PSUs") | |
Stock Compensation | |
Unrecognized compensation expense, nonvested | $ 9.2 |
Unrecognized compensation expense, period of recognition | 1 year 11 months 15 days |
Stockholders' Equity - Stock_10
Stockholders' Equity - Stock Compensation - Performance-Based Restricted Stock Units - General Information (Details) - Performance Based Restricted Stock Units ("PSUs") | 12 Months Ended |
Dec. 31, 2020D | |
Stock options, Non vested restricted stock awards and nonvested restricted stock units | |
Term of performance period | 3 years |
Number of trading days considered for average share value | 30 |
Minimum | |
Stock options, Non vested restricted stock awards and nonvested restricted stock units | |
Shares to be settled (as a percent) | 0.00% |
Maximum | |
Stock options, Non vested restricted stock awards and nonvested restricted stock units | |
Shares to be settled (as a percent) | 200.00% |
Stockholders' Equity - Stock_11
Stockholders' Equity - Stock Compensation - Performance-Based Restricted Stock Units - Fair Value Assumptions (Details) - Performance Based Restricted Stock Units ("PSUs") - $ / shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Fair Value Assumptions | |||
Weighted average estimated fair value of the PSUs granted (in dollars per share) | $ 76.88 | $ 101.82 | $ 141.61 |
Expected dividend yield (as a percent) | 0.00% | 0.00% | 0.00% |
Risk-free interest rate (as a percent) | 0.68% | 2.35% | 2.37% |
Expected volatility, minimum (as a percent) | 20.00% | 58.00% | 20.00% |
Expected volatility, maximum (as a percent) | 70.00% | 82.00% | 82.00% |
Arithmetic Average | |||
Fair Value Assumptions | |||
Expected volatility (as a percent) | 35.00% | 78.00% | 35.00% |
Stockholders' Equity - Net Inco
Stockholders' Equity - Net Income per Common Share Attributable to Magellan Health, Inc. - Tabular Disclosure (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Numerator: | |||||||||||
Net income (loss) from continuing operations | $ (24,696) | $ (17,296) | $ 47,108 | $ (1,070) | $ 9,452 | $ 4,121 | $ 7,215 | $ (8,191) | $ 4,046 | $ 12,597 | $ 22,176 |
Income from discontinued operations, net of tax | 293,629 | 28,943 | 36,397 | 19,320 | 11,132 | 17,153 | 6,398 | 8,622 | 378,289 | 43,305 | 2,005 |
Net income | $ 268,933 | $ 11,647 | $ 83,505 | $ 18,250 | $ 20,584 | $ 21,274 | $ 13,613 | $ 431 | 382,335 | 55,902 | 24,181 |
Net income available to common stockholders, basic | 382,335 | 55,902 | 24,181 | ||||||||
Net Income available to common stockholders, diluted | $ 382,335 | $ 55,902 | $ 24,181 | ||||||||
Denominator: | |||||||||||
Weighted average number of common shares outstanding-basic (in shares) | 25,781 | 25,448 | 25,054 | 24,728 | 24,491 | 24,426 | 24,101 | 23,946 | 25,255 | 24,243 | 24,349 |
Weighted average number of common shares outstanding-diluted (in shares) | 25,781 | 25,448 | 25,278 | 24,869 | 24,905 | 24,708 | 24,416 | 24,213 | 25,532 | 24,563 | 25,035 |
Net income per common share - basic: | |||||||||||
Continuing operations (in dollars per share) | $ (0.96) | $ (0.68) | $ 1.88 | $ (0.04) | $ 0.39 | $ 0.17 | $ 0.30 | $ (0.34) | $ 0.16 | $ 0.52 | $ 0.91 |
Discontinued operations (in dollars per share) | 11.39 | 1.14 | 1.45 | 0.78 | 0.45 | 0.70 | 0.26 | 0.36 | 14.98 | 1.79 | 0.08 |
Consolidated operations (in dollars per share) | 10.43 | 0.46 | 3.33 | 0.74 | 0.84 | 0.87 | 0.56 | 0.02 | 15.14 | 2.31 | 0.99 |
Net income per common share - diluted: | |||||||||||
Continuing operations (in dollars per share) | (0.96) | (0.68) | 1.86 | (0.04) | 0.38 | 0.17 | 0.30 | (0.34) | 0.16 | 0.51 | 0.89 |
Discontinued operations (in dollars per share) | 11.39 | 1.14 | 1.44 | 0.78 | 0.45 | 0.69 | 0.26 | 0.36 | 14.82 | 1.76 | 0.08 |
Consolidated operations (in dollars per share) | $ 10.43 | $ 0.46 | $ 3.30 | $ 0.74 | $ 0.83 | $ 0.86 | $ 0.56 | $ 0.02 | $ 14.98 | $ 2.27 | $ 0.97 |
Stock Options | |||||||||||
Denominator: | |||||||||||
Common stock equivalents (in shares) | 79 | 142 | 493 | ||||||||
Restricted Stock Awards | |||||||||||
Denominator: | |||||||||||
Common stock equivalents (in shares) | 18 | 8 | 15 | ||||||||
Restricted Stock Units (RSUs) | |||||||||||
Denominator: | |||||||||||
Common stock equivalents (in shares) | 104 | 35 | 37 | ||||||||
Performance Based Restricted Stock Units ("PSUs") | |||||||||||
Denominator: | |||||||||||
Common stock equivalents (in shares) | 72 | 131 | 137 | ||||||||
Employee Stock | |||||||||||
Denominator: | |||||||||||
Common stock equivalents (in shares) | 4 | 4 | 4 |
Stockholders' Equity - Net In_2
Stockholders' Equity - Net Income per Common Share Attributable to Magellan Health, Inc. - Antidilutive Securities (Details) - shares shares in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Net Income per Common Share Attributable to Magellan Health, Inc. | |||
Potential dilutive securities excluded from computation of dilutive securities (in shares) | 0.7 | 1 | 0.5 |
Stockholders' Equity - Stock Re
Stockholders' Equity - Stock Repurchases - General Information (Details) - USD ($) $ in Millions | Dec. 31, 2020 | May 24, 2018 |
Stockholders' Equity | ||
Amount authorized under stock repurchase plan | $ 400 | |
Remaining authorized repurchase amount | $ 186.3 |
Stockholders' Equity - Stock_12
Stockholders' Equity - Stock Repurchases - Tabular Disclosure (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | 63 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2020 | |
Stockholders' Equity | ||||||
Share repurchases made in open market (in shares) | 345,044 | 60,901 | 844,872 | 280,140 | 1,828,183 | 3,359,140 |
Average Price Paid per Share (in dollars per share) | $ 53.46 | $ 61.15 | $ 74.59 | $ 77.67 | $ 58.40 | |
Aggregate Cost | $ 18.4 | $ 3.7 | $ 63 | $ 21.8 | $ 106.8 | $ 213.7 |
Income Taxes - Components of In
Income Taxes - Components of Income Tax Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income taxes currently payable: | |||||||||||
Federal | $ (31,567) | $ 2,051 | $ 8,918 | ||||||||
State | (5,238) | 27 | 3,241 | ||||||||
Aggregate income taxes currently payable | (36,805) | 2,078 | 12,159 | ||||||||
Deferred income taxes (benefits): | |||||||||||
Federal | (5,903) | 5,378 | (912) | ||||||||
State | (1,823) | 1,706 | 210 | ||||||||
Aggregate deferred income taxes | (7,726) | 7,084 | (702) | ||||||||
Total income tax expense | $ (11,635) | $ (2,330) | $ (36,328) | $ 5,762 | $ 5,854 | $ 782 | $ 5,735 | $ (3,209) | $ (44,531) | $ 9,162 | $ 11,457 |
Income Taxes - Reconciliation (
Income Taxes - Reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Differences between total income tax expense and amount computed using the statutory federal income tax rate | |||||||||||
Income tax expense at federal statutory rate | $ (8,501) | $ 4,569 | $ 7,063 | ||||||||
State income taxes, net of federal income tax benefit | (1,632) | 1,285 | 3,407 | ||||||||
State contingencies added | 1,519 | 944 | 2,287 | ||||||||
Tax contingencies reversed due to statute closings | (1,762) | (2,860) | (2,500) | ||||||||
Change in valuation allowances | (924) | 584 | (691) | ||||||||
Share-based compensation | 2,982 | 1,715 | (4,750) | ||||||||
Qualified research credit | (2,424) | (1,418) | (1,584) | ||||||||
Non-deductible executive compensation | 2,717 | 3,153 | 3,052 | ||||||||
Non-deductible HIF fees | 3,263 | 3,236 | |||||||||
Sale of MCC Business | (39,819) | ||||||||||
Other-net | 50 | 1,190 | 1,937 | ||||||||
Total income tax expense | $ (11,635) | $ (2,330) | $ (36,328) | $ 5,762 | $ 5,854 | $ 782 | $ 5,735 | $ (3,209) | $ (44,531) | $ 9,162 | $ 11,457 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 3,760 | $ 3,824 |
Share-based compensation | 4,365 | 9,167 |
Other accrued compensation | 17,037 | 10,697 |
Claims reserves | 2,241 | 5,355 |
Deferred revenue | 4,491 | 4,122 |
Accrued severance | 3,505 | 1,244 |
Other non-deductible accrued liabilities | 1,224 | 1,210 |
Indirect tax benefits | 2,247 | 1,867 |
Operating lease - right-of-use liabilities | 13,564 | 18,603 |
Other deferred tax assets | 1,962 | 111 |
Total deferred tax assets | 54,396 | 56,200 |
Valuation allowances | (905) | (1,828) |
Deferred tax assets after valuation allowances | 53,491 | 54,372 |
Deferred tax liabilities: | ||
Depreciation | (29,967) | (20,479) |
Amortization of goodwill and intangible assets | (15,670) | (12,569) |
Operating lease - right-of-use assets | (7,091) | (15,893) |
Other deferred tax liabilities | (6,023) | (5,562) |
Total deferred tax liabilities | (58,751) | (54,503) |
Net deferred tax liabilities | $ (5,260) | $ (131) |
Income Taxes - Net Operating Lo
Income Taxes - Net Operating Loss Carryforwards (Details) $ in Millions | Dec. 31, 2020USD ($) |
Federal | MCC Business | Discontinued Operations, Disposed of by Sale | |
Operating loss carryforwards | |
Operating Loss Carryforwards | $ 1.3 |
State and Local | |
Operating loss carryforwards | |
Operating Loss Carryforwards | 75 |
State and Local | MCC Business | Discontinued Operations, Disposed of by Sale | |
Operating loss carryforwards | |
Operating Loss Carryforwards | $ 13.4 |
Income Taxes - Valuation Allowa
Income Taxes - Valuation Allowance (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Deferred tax assets: | ||
Deferred Tax Assets, Valuation Allowance | $ 905 | $ 1,828 |
Increase (decrease) in valuation allowance | $ (900) |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits - Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Reconciliation of the beginning and ending amount of gross unrecognized tax benefits | |||
Balance as of beginning of period | $ 9,010 | $ 10,823 | $ 10,411 |
Additions for current year tax positions | 3,316 | 1,180 | 2,925 |
Additions for tax positions of prior years | 29 | 699 | 397 |
Reductions for tax positions of prior years | (85) | (472) | (44) |
Reductions due to lapses of applicable statutes of limitations | (1,826) | (3,177) | (2,906) |
Changes due to Tax Act | 339 | ||
Reductions due to settlements with taxing authorities | (43) | (299) | |
Balance as of end of period | $ 10,444 | $ 9,010 | $ 10,823 |
Income Taxes - Unrecognized T_2
Income Taxes - Unrecognized Tax Benefits - Additional Information (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Income Taxes | ||
Unrecognized tax benefits realized that would have reduced income tax expense | $ 6.2 | $ 7.6 |
Income Taxes - Income Tax Conti
Income Taxes - Income Tax Contingencies (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income tax contingency disclosures | |||
Unrecognized tax benefits: Changes due to lapses of statutes of limitations | $ 1,826 | $ 3,177 | $ 2,906 |
Unrecognized tax benefits, could be reversed in following year | 1,300 | ||
Unrecognized tax benefits, could be reversed in following year, income tax expense, decrease | 1,100 | ||
Unrecognized tax benefits, could be reversed in following year, deferred tax assets, decrease | 200 | ||
Accrued interest and penalties related to unrecognized tax benefits | 300 | 300 | |
Interest and penalties recorded | 0 | 100 | 100 |
Tax Year 2016 | |||
Income tax contingency disclosures | |||
Unrecognized tax benefits: Changes due to lapses of statutes of limitations | 1,800 | ||
Unrecognized tax benefits: Changes due to lapses of statutes of limitations, income tax expense, decrease | 1,400 | ||
Unrecognized tax benefits: Changes due to lapses of statutes of limitations, deferred tax assets, decrease | 400 | ||
Accrued interest reversed | $ 100 | ||
Tax Year 2015 | |||
Income tax contingency disclosures | |||
Unrecognized tax benefits: Changes due to lapses of statutes of limitations | 3,200 | ||
Unrecognized tax benefits: Changes due to lapses of statutes of limitations, income tax expense, decrease | 2,500 | ||
Unrecognized tax benefits: Changes due to lapses of statutes of limitations, deferred tax assets, decrease | 700 | ||
Accrued interest reversed | $ 300 | ||
Tax Year 2014 | |||
Income tax contingency disclosures | |||
Unrecognized tax benefits: Changes due to lapses of statutes of limitations | 2,900 | ||
Unrecognized tax benefits: Changes due to lapses of statutes of limitations, income tax expense, decrease | 2,300 | ||
Unrecognized tax benefits: Changes due to lapses of statutes of limitations, deferred tax assets, decrease | 600 | ||
Accrued interest reversed | $ 200 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Supplemental Cash Flow Information | |||
Income taxes paid, net of refunds | $ 49,197 | $ 4,774 | $ 40,179 |
Interest paid | 29,840 | 29,892 | 34,223 |
Assets acquired through capital leases and deferred financing | $ 3,599 | $ 3,302 | $ 20,576 |
Discontinued Operations - Gener
Discontinued Operations - General Information (Details) - MCC Business - USD ($) $ in Millions | Dec. 31, 2020 | Apr. 30, 2020 |
Discontinued Operations, Disposed of by Sale | ||
Discontinued Operations | ||
Disposal Group, Including Discontinued Operation, Consideration | $ 850 | |
Disposal Group, Including Discontinued Operation, Consideration, Closing Adjustments | $ 158 | |
Discontinued Operations, Held-for-sale | ||
Discontinued Operations | ||
Disposal Group, Including Discontinued Operation, Consideration | $ 850 |
Discontinued Operations - Major
Discontinued Operations - Major Classes of Assets and Liabilities Held for Sale (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Assets Held For Sale | |
Less: current portion | $ 663,276 |
Total Assets Held For Sale, Less Current Portion | 335,713 |
Liabilities Held For Sale | |
Less: current portion | 409,983 |
Total Liabilities Held For Sale, Less Current Portion | 37,301 |
MCC Business | |
Assets Held For Sale | |
Cash and cash equivalents | 209,497 |
Accounts receivable, net | 209,496 |
Short-term and long-term investments | 243,496 |
Property and equipment, net | 6,710 |
Goodwill | 211,735 |
Other intangible assets, net | 85,669 |
Other current and long-term assets | 32,386 |
Total Assets Held For Sale | 998,989 |
Less: current portion | 663,276 |
Total Assets Held For Sale, Less Current Portion | 335,713 |
Liabilities Held For Sale | |
Accounts payable | 4,625 |
Accrued liabilities | 92,170 |
Medical claims payable | 281,419 |
Other medical liabilities | 31,769 |
Deferred income taxes | 15,063 |
Tax contingencies | 5,388 |
Deferred credits and other long-term liabilities | 16,850 |
Total Liabilities Held For Sale | 447,284 |
Less: current portion | 409,983 |
Total Liabilities Held For Sale, Less Current Portion | 37,301 |
MCC Business | Discontinued Operations, Held-for-sale | |
Assets Held For Sale | |
Restricted cash and cash equivalents | 95,202 |
Restricted investments | 243,496 |
Restricted other assets | $ 2,387 |
Discontinued Operations - Compo
Discontinued Operations - Components of Income from Discontinued Operations - Tabular Disclosure (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Discontinued Operations | |||
Gain on sale of MCC | $ (348,145) | ||
Discontinued Operations, Held-for-sale | |||
Discontinued Operations | |||
Managed care and other revenue | $ 2,757,511 | ||
Cost of care | 2,397,007 | ||
Direct service costs and other operating expenses | 292,351 | ||
Depreciation and amortization | 21,142 | ||
Interest expense | 285 | ||
Interest and other income | (12,332) | ||
Total costs and expenses | 2,698,453 | ||
Income from discontinued operation before income taxes | 59,058 | ||
Provision for income taxes | 15,753 | ||
Net income from discontinued operations | $ 43,305 | ||
MCC Business | Discontinued Operations, Disposed of by Sale | |||
Discontinued Operations | |||
Managed care and other revenue | 2,924,014 | ||
Cost of care | 2,377,847 | ||
Direct service costs and other operating expenses | 360,783 | ||
Depreciation and amortization | 20,358 | ||
Interest expense | 89 | ||
Interest and other income | (5,464) | ||
Gain on sale of MCC | (348,145) | ||
Total costs and expenses | 2,405,468 | ||
Income from discontinued operation before income taxes | 518,546 | ||
Provision for income taxes | 140,257 | ||
Net income from discontinued operations | $ 378,289 | ||
MCC Business | Discontinued Operations, Held-for-sale | |||
Discontinued Operations | |||
Managed care and other revenue | $ 2,529,386 | ||
Cost of care | 2,207,721 | ||
Direct service costs and other operating expenses | 300,696 | ||
Depreciation and amortization | 20,376 | ||
Interest expense | 216 | ||
Interest and other income | (9,184) | ||
Total costs and expenses | 2,519,825 | ||
Income from discontinued operation before income taxes | 9,561 | ||
Provision for income taxes | 7,556 | ||
Net income from discontinued operations | $ 2,005 |
Discontinued Operations - Com_2
Discontinued Operations - Components of Income from Discontinued Operations - Additional Information (Details) - MCC Business - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Discontinued Operations, Disposed of by Sale | |||
Discontinued Operations | |||
Stock compensation expense | $ 278 | ||
Divestiture related expenses | $ 9,379 | ||
Discontinued Operations, Held-for-sale | |||
Discontinued Operations | |||
Stock compensation expense | $ 828 | $ 536 | |
Changes in fair value of contingent consideration | $ (2,124) | $ 199 |
Discontinued Operations - Addit
Discontinued Operations - Additional Information (Details) - MCC Business - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Discontinued Operations, Disposed of by Sale | |||
Discontinued Operations | |||
Overhead expenses previously allocated | $ 30.4 | ||
Discontinued Operations, Held-for-sale | |||
Discontinued Operations | |||
Overhead expenses previously allocated | $ 33.6 | $ 35.1 |
Special Charges - General Infor
Special Charges - General Information (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Restructuring Charges | |
Restructuring charges | $ 11,946 |
Asset Impairment Charges | |
Impairment | 22,132 |
Employee severance and termination benefits | |
Restructuring Charges | |
Restructuring charges | 11,330 |
Lease shutdown costs | |
Restructuring Charges | |
Restructuring charges | 616 |
Transformation Initiative, 2020 | |
Asset Impairment Charges | |
Impairment | 22,100 |
Transformation Initiative, 2020 | Employee severance and termination benefits | |
Restructuring Charges | |
Restructuring charges | 11,300 |
Transformation Initiative, 2020 | Lease shutdown costs | |
Restructuring Charges | |
Restructuring charges | $ 600 |
Special Charges - Components (D
Special Charges - Components (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2020 | |
Non-cash related special charges | ||||
Right-of-use assets | $ 7,051 | |||
Fixed assets | 15,081 | |||
Total non-cash related special charges | 22,132 | |||
Cash related special charges | ||||
Restructuring charges | 11,946 | |||
Total special charges | $ 9,170 | $ 16,599 | $ 8,309 | 34,078 |
Employee severance and termination benefits | ||||
Cash related special charges | ||||
Restructuring charges | 11,330 | |||
Lease shutdown costs | ||||
Cash related special charges | ||||
Restructuring charges | $ 616 |
Special Charges - Roll Forward
Special Charges - Roll Forward (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Special charges | |
Beginning balance | $ 0 |
Additions | 11,946 |
Payments | (353) |
Ending balance | 11,593 |
Employee severance and termination benefits | |
Special charges | |
Beginning balance | 0 |
Additions | 11,330 |
Payments | (347) |
Ending balance | 10,983 |
Lease shutdown costs | |
Special charges | |
Beginning balance | 0 |
Additions | 616 |
Payments | (6) |
Ending balance | $ 610 |
Commitments and Contingencies -
Commitments and Contingencies - Insurance (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Insurance | |
Period for which insurance policies have been renewed | 1 year |
Specialty pharmaceutical dispensing operations | |
Insurance | |
Period for which insurance policies have been renewed | 1 year |
Per claim self-insured retention | $ 50 |
Aggregated self-insured retention | 250 |
General liability | |
Insurance | |
Per claim un-aggregated self-insured retention | 250 |
Managed care liability | |
Insurance | |
Per claim un-aggregated self-insured retention | 1,000 |
Per class action claim un-aggregated self-insured retention | (10,000) |
Per claim self-insured retention, anti-trust claim | 5,000 |
Professional liability | |
Insurance | |
Per claim un-aggregated self-insured retention | $ 250 |
Commitments and Contingencies_2
Commitments and Contingencies - Regulatory Issues (Details) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
AFSC | ||
Acquisitions | ||
Percentage of total revenues attributable to subsidiary | 2.40% | 3.00% |
Business Segment Information -
Business Segment Information - Operating Results by Business Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Operating results by business segment | |||||||||||
Net revenue | $ 1,184,960 | $ 1,170,117 | $ 1,100,075 | $ 1,122,379 | $ 1,133,775 | $ 1,158,543 | $ 1,154,289 | $ 1,119,006 | $ 4,577,531 | $ 4,565,613 | $ 4,957,522 |
Cost of care | (362,478) | (364,438) | (321,831) | (349,108) | (367,819) | (397,697) | (408,911) | (369,097) | (1,397,855) | (1,543,524) | (1,554,691) |
Cost of goods sold | (559,140) | (560,269) | (528,067) | (533,241) | (507,917) | (523,973) | (501,081) | (526,314) | (2,180,717) | (2,059,285) | (2,452,703) |
Direct service costs and other | (259,401) | (216,770) | (199,756) | (204,241) | (207,616) | (195,844) | (195,907) | (202,300) | (880,168) | (801,667) | (773,915) |
Stock compensation expense | 25,172 | 24,673 | 28,936 | ||||||||
Changes in fair value of contingent consideration | 1,108 | ||||||||||
Segment Profit (Loss) | 143,963 | 185,810 | 206,257 | ||||||||
Managed care and other | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 579,454 | 568,688 | 548,711 | 553,168 | 580,544 | 591,229 | 608,614 | 566,548 | 2,250,021 | 2,346,935 | 2,350,576 |
PBM | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | $ 605,506 | $ 601,429 | $ 551,364 | $ 569,211 | $ 553,231 | $ 567,314 | $ 545,675 | $ 552,458 | 2,327,510 | 2,218,678 | 2,606,946 |
Healthcare | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 1,959,869 | 2,082,088 | 2,110,756 | ||||||||
Pharmacy Management | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 2,638,301 | 2,502,268 | 2,865,844 | ||||||||
Operating Segments | Healthcare | |||||||||||
Operating results by business segment | |||||||||||
Cost of care | (1,397,855) | (1,543,524) | (1,554,691) | ||||||||
Direct service costs and other | (433,723) | (402,006) | (401,083) | ||||||||
Stock compensation expense | 6,876 | 7,639 | 6,446 | ||||||||
Changes in fair value of contingent consideration | 1,108 | ||||||||||
Segment Profit (Loss) | 135,167 | 144,197 | 162,536 | ||||||||
Operating Segments | Healthcare | Managed care and other | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 1,959,869 | 2,082,088 | 2,110,756 | ||||||||
Operating Segments | Pharmacy Management | |||||||||||
Operating results by business segment | |||||||||||
Cost of goods sold | (2,199,674) | (2,076,509) | (2,468,170) | ||||||||
Direct service costs and other | (360,970) | (323,162) | (298,713) | ||||||||
Stock compensation expense | 7,723 | 7,834 | 5,458 | ||||||||
Segment Profit (Loss) | 85,380 | 110,431 | 104,419 | ||||||||
Operating Segments | Pharmacy Management | Managed care and other | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 290,855 | 265,439 | 240,427 | ||||||||
Operating Segments | Pharmacy Management | PBM | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | 2,347,446 | 2,236,829 | 2,625,417 | ||||||||
Corporate and Eliminations | |||||||||||
Operating results by business segment | |||||||||||
Cost of goods sold | 18,957 | 17,224 | 15,467 | ||||||||
Direct service costs and other | (85,475) | (76,499) | (74,119) | ||||||||
Stock compensation expense | 10,573 | 9,200 | 17,032 | ||||||||
Segment Profit (Loss) | (76,584) | (68,818) | (60,698) | ||||||||
Corporate and Eliminations | Managed care and other | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | (703) | (592) | (607) | ||||||||
Corporate and Eliminations | PBM | |||||||||||
Operating results by business segment | |||||||||||
Net revenue | $ (19,936) | $ (18,151) | $ (18,471) |
Business Segment Information _2
Business Segment Information - Identifiable Assets by Business Segment (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Segment reporting information | |||
Restricted cash | $ 49,227 | $ 51,253 | $ 56,211 |
Accounts receivable, net | 743,502 | 680,569 | 657,734 |
Investments | 143,459 | 101,661 | 98,878 |
Pharmaceutical inventory | 43,334 | 44,962 | 40,818 |
Goodwill | 873,779 | 806,421 | 806,421 |
Other intangible assets, net | 79,689 | 81,675 | 128,132 |
Operating Segments | Healthcare | |||
Segment reporting information | |||
Restricted cash | 33,381 | 49,027 | 52,681 |
Accounts receivable, net | 229,250 | 201,462 | 192,239 |
Investments | 136,243 | 94,943 | 91,841 |
Goodwill | 478,227 | 410,869 | 410,869 |
Other intangible assets, net | 39,446 | 20,059 | 32,893 |
Operating Segments | Pharmacy Management | |||
Segment reporting information | |||
Restricted cash | 12,658 | 2,226 | 576 |
Accounts receivable, net | 509,086 | 478,627 | 465,345 |
Investments | 7,216 | 6,718 | 7,037 |
Pharmaceutical inventory | 43,334 | 44,962 | 40,818 |
Goodwill | 395,552 | 395,552 | 395,552 |
Other intangible assets, net | 40,243 | 61,536 | 82,072 |
Corporate and Eliminations | |||
Segment reporting information | |||
Restricted cash | 3,188 | 2,954 | |
Accounts receivable, net | $ 5,166 | 480 | 150 |
Other intangible assets, net | $ 80 | $ 13,167 |
Business Segment Information _3
Business Segment Information - Reconciliation of Segment Profit to Income Before Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Reconciliation of segment profit to income before income taxes | |||||||||||
Income (loss) from continuing operations before income taxes | $ (36,331) | $ (19,626) | $ 10,780 | $ 4,692 | $ 15,306 | $ 4,903 | $ 12,950 | $ (11,400) | $ (40,485) | $ 21,759 | $ 33,633 |
Stock compensation expense | 7,341 | 5,442 | 6,592 | 5,797 | 5,462 | 4,604 | 5,207 | 9,400 | 25,172 | 24,673 | 28,936 |
Changes in fair value of contingent consideration | 1,108 | ||||||||||
Depreciation and amortization | 26,411 | 24,730 | 23,888 | 23,358 | 27,869 | 28,890 | 28,191 | 25,417 | 98,387 | 110,367 | 112,284 |
Interest expense | 6,626 | 7,286 | 7,995 | 8,958 | 8,826 | 8,935 | 9,070 | 9,037 | 30,865 | 35,868 | 35,180 |
Interest and other income | (1,935) | (349) | (551) | $ (1,219) | $ (1,578) | $ (1,699) | $ (1,821) | $ (1,759) | (4,054) | (6,857) | (4,884) |
Special charges | $ 9,170 | $ 16,599 | $ 8,309 | 34,078 | |||||||
Segment Profit (Loss) | $ 143,963 | $ 185,810 | $ 206,257 |
Selected Quarterly Financial _3
Selected Quarterly Financial Data (Unaudited) - Tabular Disclosure (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Net revenue: | |||||||||||
Net revenue | $ 1,184,960 | $ 1,170,117 | $ 1,100,075 | $ 1,122,379 | $ 1,133,775 | $ 1,158,543 | $ 1,154,289 | $ 1,119,006 | $ 4,577,531 | $ 4,565,613 | $ 4,957,522 |
Costs and expenses: | |||||||||||
Cost of care | 362,478 | 364,438 | 321,831 | 349,108 | 367,819 | 397,697 | 408,911 | 369,097 | 1,397,855 | 1,543,524 | 1,554,691 |
Cost of goods sold | 559,140 | 560,269 | 528,067 | 533,241 | 507,917 | 523,973 | 501,081 | 526,314 | 2,180,717 | 2,059,285 | 2,452,703 |
Direct service costs and other operating expenses | 259,401 | 216,770 | 199,756 | 204,241 | 207,616 | 195,844 | 195,907 | 202,300 | 880,168 | 801,667 | 773,915 |
Depreciation and amortization | 26,411 | 24,730 | 23,888 | 23,358 | 27,869 | 28,890 | 28,191 | 25,417 | 98,387 | 110,367 | 112,284 |
Interest expense | 6,626 | 7,286 | 7,995 | 8,958 | 8,826 | 8,935 | 9,070 | 9,037 | 30,865 | 35,868 | 35,180 |
Interest and other income | (1,935) | (349) | (551) | (1,219) | (1,578) | (1,699) | (1,821) | (1,759) | (4,054) | (6,857) | (4,884) |
Special charges | 9,170 | 16,599 | 8,309 | 34,078 | |||||||
Total costs and expenses | 1,221,291 | 1,189,743 | 1,089,295 | 1,117,687 | 1,118,469 | 1,153,640 | 1,141,339 | 1,130,406 | 4,618,016 | 4,543,854 | 4,923,889 |
Income (loss) from continuing operations before income taxes | (36,331) | (19,626) | 10,780 | 4,692 | 15,306 | 4,903 | 12,950 | (11,400) | (40,485) | 21,759 | 33,633 |
Provision (benefit) for income taxes | (11,635) | (2,330) | (36,328) | 5,762 | 5,854 | 782 | 5,735 | (3,209) | (44,531) | 9,162 | 11,457 |
Net income (loss) from continuing operations | (24,696) | (17,296) | 47,108 | (1,070) | 9,452 | 4,121 | 7,215 | (8,191) | 4,046 | 12,597 | 22,176 |
Income from discontinued operations, net of tax | 293,629 | 28,943 | 36,397 | 19,320 | 11,132 | 17,153 | 6,398 | 8,622 | 378,289 | 43,305 | 2,005 |
Net income | $ 268,933 | $ 11,647 | $ 83,505 | $ 18,250 | $ 20,584 | $ 21,274 | $ 13,613 | $ 431 | $ 382,335 | $ 55,902 | $ 24,181 |
Weighted average number of common shares outstanding-basic (in shares) | 25,781 | 25,448 | 25,054 | 24,728 | 24,491 | 24,426 | 24,101 | 23,946 | 25,255 | 24,243 | 24,349 |
Weighted average number of common shares outstanding-diluted | 25,781 | 25,448 | 25,278 | 24,869 | 24,905 | 24,708 | 24,416 | 24,213 | 25,532 | 24,563 | 25,035 |
Net income per common share - basic: | |||||||||||
Continuing operations (in dollars per share) | $ (0.96) | $ (0.68) | $ 1.88 | $ (0.04) | $ 0.39 | $ 0.17 | $ 0.30 | $ (0.34) | $ 0.16 | $ 0.52 | $ 0.91 |
Discontinued operations (in dollars per share) | 11.39 | 1.14 | 1.45 | 0.78 | 0.45 | 0.70 | 0.26 | 0.36 | 14.98 | 1.79 | 0.08 |
Consolidated operations (in dollars per share) | 10.43 | 0.46 | 3.33 | 0.74 | 0.84 | 0.87 | 0.56 | 0.02 | 15.14 | 2.31 | 0.99 |
Net income per common share - diluted: | |||||||||||
Continuing operations (in dollars per share) | (0.96) | (0.68) | 1.86 | (0.04) | 0.38 | 0.17 | 0.30 | (0.34) | 0.16 | 0.51 | 0.89 |
Discontinued operations (in dollars per share) | 11.39 | 1.14 | 1.44 | 0.78 | 0.45 | 0.69 | 0.26 | 0.36 | 14.82 | 1.76 | 0.08 |
Consolidated operations (in dollars per share) | $ 10.43 | $ 0.46 | $ 3.30 | $ 0.74 | $ 0.83 | $ 0.86 | $ 0.56 | $ 0.02 | $ 14.98 | $ 2.27 | $ 0.97 |
Managed care and other | |||||||||||
Net revenue: | |||||||||||
Net revenue | $ 579,454 | $ 568,688 | $ 548,711 | $ 553,168 | $ 580,544 | $ 591,229 | $ 608,614 | $ 566,548 | $ 2,250,021 | $ 2,346,935 | $ 2,350,576 |
PBM | |||||||||||
Net revenue: | |||||||||||
Net revenue | $ 605,506 | $ 601,429 | $ 551,364 | $ 569,211 | $ 553,231 | $ 567,314 | $ 545,675 | $ 552,458 | $ 2,327,510 | $ 2,218,678 | $ 2,606,946 |
Selected Quarterly Financial _4
Selected Quarterly Financial Data (Unaudited) - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Selected Quarterly Financial Data (Unaudited) | |||||||||||
Stock compensation expense | $ 7,341 | $ 5,442 | $ 6,592 | $ 5,797 | $ 5,462 | $ 4,604 | $ 5,207 | $ 9,400 | $ 25,172 | $ 24,673 | $ 28,936 |