MGLN - Earnings call transcript Q3 2017

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Operator

Welcome, and thank you for standing by for the Third Quarter 2017 Earnings Call. At this time all participants are in a listen-only mode. [Operator Instructions] Today's conference is being recorded.

If you have any objections, you may disconnect at this time.

Now I will turn the meeting over to Joe Bogdan. begin. Please

Joe Bogdan

CFO, thank With Magellan Chairman me Barry distributed The was replay A and the and the XXXX Third and for are numbers press available to morning. will the call earnings of Smith; Call. The conclusion in Earnings after access today our you morning, the our Health's this joining of Quarter CEO, call release. release through Good announcing be Rubin. third Jon are earnings quarter this shortly December X. replay Magellan's

For those XXXX, the as rebroadcast made presentation, earnings been this of that of to have are and you the who listen subsequent herein X, to we initial updated remind November not today, Wednesday, the remarks call.

uncertainties forward-looking and growth beyond discussed to in make results which many Listeners we morning review furnished factors risk statements our are risks to, subject statements outlook. current XXXX uncertainties, with, to call, prospects to the filed advise generally press our cautioned certain predict statements, listeners the These our our release and that are these of difficult to are we our we'll from can and related including our and and this risks expectations, During control. or materially to differ actual documents SEC. cause and

please In results. Magellan measures financial uses note our that when addition, certain non-GAAP describing financial

adjustments direct consideration excludes expense, changes in filings and interests by tables and stock certain X, noncash relation of reflect acquisitions. as net intangibles, or adjusted of of after as profit, special includes identified restricted and made acquisition defined call in net available net exclude is today's included service of sold, adjusted in adjusted measures Chairman other our over to GAAP fair contingent for SEC income parties, by of Adjusted sum to less our which recorded this consideration, as and contingent to but compensation to press segment segment release, from the release. acquisition profit value XXXX, the Barry non-controlling compensation expenses identified a our morning's purchases changes January EPS is website refer held of the of to well impairment intangibles. with from to completed on now the other income care, charges the will measures. as Smith. benefits, well value stock sellers, cost to income resulting amortization stock non-GAAP in acquisitions expense from unconsolidated reconciliation operating the Segment EPS, refer costs cost turn we fair and Please for revenues equal and CEO, Specifically, goods in financial I press of are profit which subsidiaries, corresponding

Barry Smith

today. Thank Good joining you thank morning you, Joe. us all for and

across I acknowledge to in country am wildfires, the these transpired conversation. to money I'd like in such that time health series proud face events our of that responded Before the the their so company national York, helping organizations associates mass Many tragic we and our brought in victims behavioral events Several hurricanes, our once have are tragedy. the forefront and such of emotional the of toll of to of our of donated events way of incidents. issues since begin, our Las and unfortunate again and have the yesterday's Vegas last New shooting call.

of vibrant reassuring our lives. share to results, comments the Magellan to more counseling quarter community the expertise local see our In my unique leveraging lead within year. we it the stepping pharmacy Health on striving the the I'll up is such healthcare Senior In face in highlight activities acquisition, offered review the our an management. and and the discuss remainder detail. to time the behavioral health I'll over Jon update free to third and to confidential Then XX,XXX of morning, segments financials devastation, this provide referrals resources, addition, to Associates priorities turn Whole XX-hour help in In for individuals healthy,

reported EPS revenue With third of income we billion, of $X.X quarter, $X.XX. million $XX.X of net net the and

adjusted million $X.XX achieved of Our per we million. segment share, $XX.X and net profit income was $XX.X or

health As growth note we an its which Senior planning team record care Senior underscores for Whole the expertise Expanding Integration and our footprint plans in XX is members. XXXX complete. strategy. completed X.X we and like high-quality, announced company's the healthcare earned still Health and yesterday, extensive track in Senior our reputation, track this we acquisition experience would also has strong helps that to area of Whole Medicare and management Health. commitment a facilitating a Whole of their membership. outstanding cost-effective high-growth approximately of recently targeting million on Health's I are to care once synergies to rating, accelerate star for quality

Health, later year closing Whole healthcare in call. tax segment full provide our effective the details Senior and in reflect improved the to guidance We the XXXX Jon will of more lower an profit business are rate. updating

move direct requires when this in misuse managed opioids people person's such office-based the healthy. of and a and on entire the and practices with to epidemic treatment, individuals are in opioids cognitive well and background emergency, state find from healthcare and opioid Magellan of healthcare clinical medication, an diversion as opioid to is the get behavioral recovery we recovery We're as including declared President help disorder new and computerized journey the I doing edits therapy people which to provide an have federal help psychosocial evidence-based public on three and misused. to prevent distinct peer medical are address work needed, the to best helps limits treatment opioid epidemic. behavioral being its phases: assisted opioid prescribed has before and [ph] and misuse as a support is upon overview is utilizing services, Magellan that management epidemic week, when national reflect as solutions severity Before to address such continuum and programs focus our this business, like or Last opioid to resources. individualized I'd help use innovative and individuals ways resiliency. of their to pain to tools with current help our whose Leveraging role among dosing opioids. management also care health, path stay clinically The health

an our me let provide our process you sales on Next, business. healthcare with commercial in update

management healthcare specialty scope conducted expanded the of largest able physical medicine. competitive procurement the only process. customer were the our to relationship renew a of also One but our the to we Not contracts contract, of include

these pipeline converting contracts is strong a remains opportunities into and us. signed priority top healthcare for Our

timing the of we process, seeing As limitations continue in and some are to sales work sales XXXX. beyond new customer we through delays the

accounts second that pleased has we discussed these quarter versus progress earnings on - improved to our commercial helped well to XXXX improvement results underway, our accounts. plan I'm regarding which report During us the improvement second call, plan quarter. healthcare is X operating achieve

updates to in we some government Plus three program the our membership initial on XXXX, provide in XXXX. business. have to August X, in Virginia, In is X, successfully To-date, Commonwealth from phase January launched I'll Now scheduled regions. Coordinated Care

procurement. launch XXXX. decision for on second Health SMI the anticipate into their light XXXX. illness. the to ahead look the exceptional from next an team's state in storm. to and recently With we response our Medicaid challenges serious Administration the award a Florida, of in we own remaining with forward bid would to quarter I response of but has to in partnership our Care and January plan specialty plan impressive moving in Agency with create are Irma, all again the members mental respect addition, submitted received the impacted In Hurricane first localities any nation's been acknowledge during approval We of to focused our by X, to course, like there on the by guarantees This to persons phase, particularly our no recovery

to Pharmacy Turning business. our

continue provide specialty pharmacy on capabilities in management to and while differentiated full-service management. benefits We drug market. a emphasizing focus to benefit approach medical We the pharmacy

including XXth brought market industry with clients issues drug large new space. the and these Specialty discuss specialty our In sales, hosted which resonating We and to Annual value is proposition together key see health evidence employer experts, in in we continue to that a pharma our August, Summit, the plans. two

the a years, across the this reflecting area. this must-attend in become event has leadership Over industry, Magellan's thought

the and when comes recently trends. annual tools in it address be the pharmacy robust need trend we growing highlights double-digit addition, growth management Magellan These with more to cost second for management released and the which dramatic drug clinical Medicaid RX to these specialty rising and customers In to apart sets findings help space. innovative pinpoint the engaged Medicaid report, spend at fee-for-service states

of mission implementation leading Jon of balance the Senior Rubin. future major focused Success like will Whole initiatives and year, our integration program At turn call these I we in to the the of Chief Financial the lives. Health. and Jon? to growth Officer, the Virginia on over fulfills this to vibrant our would our time, healthy in remain fuels humanity For

Jonathan Rubin

Complete morning, outlook good an about XXXX and on of In and provide details and plan. our I'll initial review share Barry, year discuss Florida my the Senior Thanks, third our provide morning, Health then Magellan everyone. some I'll Care revised results, additional this on update Whole comments acquisition rates. full capitation for of quarter the commentary business

income was to the over $X.XX income $X.X period approximately in prior the per to billion, the XXXX. million of same EPS for compared was share quarter, was net adjusted which million driven from revenue net This represents XXXX. earnings $XX.X For the million quarter. prior respectively acquisitions. share per $X.XX. an This to net $XX.X and third earnings profit annualization mainly $XX.X in business was for and was of million was Net the $XX.X This EPS income quarter the by $XX.X $XX.X of was income compares from of $X.XX third compares of XX% and adjusted prior quarter. and million $X.XX. quarter, increase the increase growth and Segment million year of net year revenue and adjusted Adjusted year

healthcare XXXX segment year our business. third a of million quarter For which of of including third government decrease profit quarter, our This healthcare partially in XXXX. is quarter of improved $XX compared due out-of-period the business, million, by X% the represents to adjustments, the $XX.X favorable prior offset mainly was results to decrease for

made results the we've pressures. Our progress quarter healthcare this the commercial in addressing account reflect

rate we've adjustments improve to costs. initiatives and Specifically, medical made begun

been issues forecasted, resolved of by end expect the still While to we slower the the year. progress have originally has than

reported was from which This margins improved business, Turning primarily XX% quarter earnings pharmacy due XXXX, XXXX. $XX.X of third acquisition, in Veridicus from and for was we an the management, to segment XX, September the new increase which PBM million December quarter ended of increase to profit of XXXX. closed the

to Health service operating XX, stock costs million compensation period. contingent This inclusive due compensation compared million corporate results, the due of discretionary of to rate year's primarily XXXX, eliminations, the financial a third changes from quarter the to by higher losses XX% to an September stock of benefit mix. effective compared Regarding year's expenses, quarter. and current $X.X quarter income impacted rate consideration, current $X.X revenue was related expenses. primarily million in growth but the vesting awards. the excluding totaled decline the XX.X% for The in Insurer direct in value is of prior XXXX. compared year the Fee quarter tax other of and to Last ended was for the decrease This the expense nondeductible is excluding prior year's tax Total of and $XX.X was Stock expense, business AlphaCare. million, in decrease current compensation nine at quarter $X.X the the XX.X% fair expense is was to This in XX.X% in stock employee months change and quarter. prior suspension in increase

In rate current to Fees stock the is effective favorable suspension Insurer option lower nondeductible year-to-date the addition, the tax exercises. and of Health of the due impact

valuation tax the AlphaCare losses Whole we subsidiaries, the and AlphaCare. historical fourth operating anticipate recorded reversal deferred will a merge Senior which result to is New net Health York allowances intention quarter for in tax asset in against of Our

a of a anticipate items, As effective result income full year tax these rate approximately XX%. now we of

operations of we recorded The period. prior million in flow from ended year contingent months CDMI XX, year XXXX, flow to D prior operations cash $XXX.X flow was from the nine million. initial This Our to cash the buildup portion of September was compares consideration $X.X used the the related receivables. of for that cash payments Part and the by acquisition impacted in operations for

XX, $XXX.X compared million excess the $XXX.X XX, million cash and Restricted September through investments cash at due growth $XXX.X investments to for primarily earnings and grew XXXX. October in XX, and to $XX.X September unrestricted related shares undistributed XXXX, totaled versus to XXXX. XX, to investments million million. XX, approximately capital and $XXX.X the Care increase repurchased September Virginia. at Complete we Year-to-date, of at This As cash company's held and million XXXX, $XXX.X of XXXX, entities. XX, Magellan million at XXXX, was at Approximately of December XXX,XXX unrestricted regulated December Florida

have We in our which remaining XX, October XXXX. runs program, $XX.X repurchase authorization share million through

public price During public completed XX, of and XX.X% issued bond we the million XXXX, quarter, offering. were The offering inaugural on at third bear notes X.X%. September a an $XXX at interest

plus million a of basis financing revolver. The facility public LIBOR were term working to advantage the to banking retire used environment a favorable facilities and proceeds new million at points the from note provide and and $XXX a $XXX We includes banking into enter previously XXX loan also new the existing that additional facility X-year banking the took capital.

disclosed we we've acquisition of Health. Whole completed As Senior yesterday, the

current share months the associated Senior the providers. Florida passes capitation decrease pretax updating transaction by released finalized, October to more by in and business an factors plan and to from healthcare range of that $XXX count The expectations. now million mix. $X.XX this provide run is to to and base the segment reflect EPS impact that has will timing released reflects in model in of business in profit, twelve expect our of normalized profit full repurchases Whole margins October adjusted rate which healthcare rates due lower start, XX.X with range reflects on Senior the The previous largely average corrective With updated of state XX, our call, three respect the for To received actions sales Barry be an and shares $X year fee in reduction exercises on that improved these on excludes revenue be MCC XXXX typical will profit rates the effective outlook a for that our effective The of the activity. estimate million X. state to It's fully now in has $XXX $X.XX million. In year provide guidance and segment tax million two approximately We We of to expected to revising the was state of $XXX months We're final guidance net $XXX change state costs. of to at any EPS our million commercial add not of XXXX net are schedule rate yet the to of Note across income potential arrive high-level delays advised the geography $X.XX mid-single-digits. of be impact Health approximately guidance portion XX% view profit A low through flow in the full to XXXX, $XXX also million segment note discussed. based new and plans to of advance segment base health million. cash between adjustment rates some million. guidance capitation changes the updated closing the option rate. decrease $X.XX November. $X XXXX base based late varies This to the a diluted billion, income and of also $XXX to gets is finalizing is Magellan's $X.XX XXXX between our this Once early to and our to the approximate net model average business, decline XXXX detailed in a we category our million of that consistent segment operations future membership adjusted share adjustment We're risk through important and for $XXX in and to year to our needs million. The XXXX adjusted range rate. guidance health anticipate Health, a I'll XXXX to base plan's business full risk for to plan the be line with $XXX levels we profit now billion is Medicaid that the of Whole rates. million in applied $X.XX will be in state December. We're For but from commentaries.

our favorable First, $X net million approximately year-to-date of adjustments. include out-of-period results

profit net Whole million Senior above, is segment in a expected $X to Health XXXX. noted as to Second, contribute

Insurer Finally, approximately to segment offsetting in our million an the approximately million range Fee taxes. profit on would will and Health restoration $XXX $XX XXXX have profit favorable the on for three be impact these of segment After in normalized items, XXXX impact of adjusting million. an the $XXX

rate changes startup XXXX, Florida. contribution growth rate before Virginia that profit healthcare for within of expected Whole favorable drivers to compared have primary same-store anticipated full XXXX, of As the capitation initiatives our during effective in and D the are expect are year reduction pricing plan. this XXXX, expected new by These XXXX, to in Senior absence annualization partially offset commercial variances the normalized we growth favorable in business we existing calendar of follows: impact contracts, of sold favorable our impact business and growth losses incremental formulary new be will Part MCC segment the of of anticipated modest this year the in XXXX as of Health. The currently the for

the Health per more the execution Operator? per income Whole acquisition December. adjusted Now as questions. that that, share we're XXXX, back for Whole this Senior integration disclosed. With I'll providing and net of to to approximately summary, In we to growth, and $X.XX for focused $X share approximately outlook income in growth be to on previously net in we'll continued will forward details to by your and by the of Senior addition Health balance take year-over-year accretive estimate early of the including call turn XXXX our the look operator now organic

Operator

Thank you.

comes on from Dave Styblo question first Jefferies. the The line from

now is open. line Your

David Styblo

thanks the morning, guidance this understand and to there Hi there. questions. want back I just year's good to for to with start parts come moving the

sounds customer of sounds Health accounts, it's that of part fixes if I had expected, be And part but to the both So the than if due still that business Senior core on side, those the I the call, business, like to back customer coming as fix like And it earnings the healthcare that have especially in the the a as out there? another the are down. bit drags two well a the little we earnings contribution, new Are at Whole largely the the delay the two you think year. of completed end slower of right. mentioned by were sales

Jonathan Rubin

Jon. it's David, Yes,

think absolutely right. I that's

So alluded little that that in for fact corrective have are made of to significant in is behind signed contracts two a the bit healthcare later. The as the the on very cases, in we're results new even got those both some strong sales for actions just continuing being business implemented the some Barry sales progress sales, to and the on sales good second to while the be. to. quarter expected we've bit where that little reduction factors. we It's pipeline current due we're year Similarly we've a accounts,

expect on both year, and to the So with of affect by areas fully in are point year although and there those end into expected. timing the both key track items where we make is really they we the the be current XXXX I'd those

item. So really, year a current it's

David Styblo

I we that to from profit, $XX then implies as And guess, at Okay. the XQ bridge XQ about a pickup. million look segment

in this help about quarter, is get help quantify for is rate the of typically your think again Does recognize what in on numbers $X retroactive expect is Senior about those rest you us be? you those customers, And additional is typically to that what Health. is can that year Whole be. I - the what customers? the a it the million back basis that to us and know fourth going the And maybe of comfortable could you performance - improvements guys else perhaps would two including quarter? bridge or from Or on contemplate fourth that fix the payments what that I receive

Jonathan Rubin

Yes.

say of items. would I majority the that you the So hit

I'd So we're months. you in as coming continuing One X have say, Senior there. balance, healthcare to And equally the getting Health weighted. relatively improvement being progress on for between split incremental commercial the make the Whole in areas, results different two then is increasing momentum the

have quarter's that meaning third get Second full our is the continued across businesses, we actually across and rate implement our is customer new a quarter. sales businesses. actually to in in timing fourth new third then we'll run business quarter fourth And of sort growth, and of of settlements

say, evenly I Whole improvement three relatively So would the split if Health, Senior you is the take of balance areas. between the out those

David Styblo

us quarter of Okay. specific know, accounts and better there back have of going you the just and ready quite new sprinkling again coming line fourth segment delays a but kind Can I and elaborate come confident accounts know it more top push profit? continued not Is one you there? that delays? sense affected guys with going in you business feel fourth is just that been the out Or and the comments happening that have what's guys two what's new about to back to to And that, happening or starts. on the to I give Any that's they're get color to 'XX, in up of quarter?

Barry Smith

going marketplace into we there, are - very implement right pipeline. have change the some next operational It's to have for things and that this issues year lot Thanks They a the of clients year happening you have ongoing now a the today. lot uncertainty. the in over - here. the with of on course And clearly, ongoing a robust as out going question. Barry Dave, do the as point

been on their So a I lot plate. it's think basically

we that this to having need looking they for that robust that, savings them increased they're what and said Now for year. solutions also allow next achieve allow provide to achieve

an just, and individual the more going a on markets simultaneously going and the on, I So issue it's with think, public their both markets of on. lot plates

David Styblo

comments the XXXX. had then one And Okay. last just on early was I the about

one didn't areas of bridge of the I MLTSS. that was hear I the Virginia think the

I And guys something to that that on out? not million track think $XX that's to sort you would forward million then $XX losses track. of outsized are year. for sure want you and embedding is guidance still go year this to I be on make of for that, a call tailwind as next

Jonathan Rubin

of I is this Yes, losses million factors. at mention one-time Dave, of year that hope Virginia think I million to in nature. that that I one intended absence I $XX $XX did because that of as in to we called or the the least that, startup

is that the factors. one of So

David Styblo

Okay. And that. I'm sorry, maybe I did miss

there? that to for So is And impact the $XXX that million stepping $XXX normalized Virginia said point in does -- the million. you off I think 'XX include of guys

Jonathan Rubin

Yes.

David Styblo

Okay, thanks.

Barry Smith

You bet.

Operator

question line James. is on Our Raymond from from next the Michael Baker

line now Your open. is

Michael Baker

would Yes, lot. it you pickup you Or December? dynamics the just formulary, those on changes a I now? thanks change. a do if make late And you utilization how in is light see color D trying the some start typically, to Is when when type occurs? get Part to was to that of formulary see progressing

Jonathan Rubin

it's Yes, Michael. a question, good

impact the until impact, major In the mean, I XXXX. go terms effect doesn't of into change, the formulary

disenrollment least it's XXXX - in consistent the the at of at very higher our is our have we initial for of there's that we that certain be market, again, higher that of been utilization, expectation expectations. with utilizers might while of formulary early, the some we'll medications. whether see. were end formulary the will we anything, pricing a though, end because we've wider And those Which, changes are many the year, More that many a expecting implemented the will than the seeing tail bit a both and are Now members year. disenroll of result changes the that's to as some had see than disenrollment little

for lot a XXXX. out still So to play

haven't quarter quarter see change out. We material third fourth any in utilization in that really in we'll and plays seen how

Michael Baker

anticipate a the Express I second you I'm was differentiating follow successful I been marrying already with. you separately if different. of look have building you but is on that know then wondering features had that specialty bought interested already, help I'm you this might totally mainly you Scripts I on Magellan just about, And in And the Care, to mainly in helpful. touched saw you've I'd understand us with benefits. which or they be that question. is if that that That's understand And color I the talking sure your Barry, Complete could eviCore. what about also And But of some benefits don't pharmacy

Barry Smith

pharmacy been who for market a company, very eviCore. capable years years. wouldn't medical of they spend are today Yes, Arlotta, link that our change in the the do to that thing to that We We specialty pharmacy And it expect years. our dramatically. if is a capabilities, Michael, think think CEO expresses I doing of the beyond got intelligently fact robust, We've you about with to we And eviCore with recognize do. well, you've through smart view we're been for back medical great many last several pharmacy to company at and that that acquisition the Great world, benefit. benefits know segment as a him real we clearly the Express clearly guy. competitive John medical in the eviCore. the again, very is compliment the combining we've our strategy. think We where

and how a the and in We solutions combination that's for great the our disruption very think them so think we're for management. a competitive in, We're together fine marketplace do has robust capabilities. over market there'll or them. think strategy in year our We So likely for next be that, that's our solutions. we opportunity on been management. for RBM think to we've Again, example, very in eviCore out and very figure been presents very strong that strong work they as RBM historically we the - particularly,

including I anybody We in in musculoskeletal. market, beyond have the excelled, think, eviCore,

that's have growing. new lives of over X.X musculoskeletal for in been business of million and Again, We couple years. our last the

decided that strategy. the is side the attributes pharmacy a the we that at where specialty in capabilities health Then combination and that, the already. we're think to population's the you to to in special far all if utilize think we them provided all three years, plan, a offerings along of So fairly years point Magellan MCC, we before ultimate culmination Magellan Care. the Magellan's medical establishing you smart the guess, looked of out, We again of have said this is apply needs whole We I ago, or both two and we like we and as individual. that XX% form combination. Complete

we the capacity that's think very And it, unique and a realize Care, integrating in benefits the have way we able of Complete great been So to strength. these Magellan we've a in industry.

Michael Baker

And then be competitive dynamic here. just cropping to that up seems on another

As you Prime. trying know, compete to in-house to with Anthem appears the to and take be PBM CVS leverage

As two to benefits specialty the have add-on you of those know, it. neither

some of of do just opportunities up So a trying the Blue's see to picking what that I'm or get competition you unseating of is, business? sense in light

Jonathan Rubin

and Blues. XX maybe because And successful of in many, think, that really of but by kidding, Yes. and medical changed we already. so in we world. market fundamental started of many consortium base in the I years. strongest, I have And over I was within actually partners. Blue's specialty, the we're it We've great the of the little fact, known the specialty ago, the ago in fact, terms plus lot just born, understanding, a Again, years has a But Blue's before field obviously been years very born, Blue's were before a not was

you're or and Now will the combination and of require referring - combinations these CVS other all all this medical expertise Anthem in still to, pharmacy.

So yes, see opportunity uniquely we that industry. provide we for do can these the feel in robust we a solutions

Michael Baker

Thanks a lot.

Jonathan Rubin

You bet Michael.

Operator

Gupte is Leerink the on question from next The Partners. from line Ana

is open. line Your now

Anagha Gupte

to on on couple Hi, then just the thanks, your other have I'd and A earnings commentary love questions some good just morning. 'XX, of questions I get on. perspective the and

in is point than model the of whatever million jump in And in not have that time. still next for the to first net $XXX expected capitation one adjustments that a change might Florida rate better or The expectation that that came year you it of off. is, of million I on And one this growth off at modest determined. adjustment rates think, said rate I $XXX your risk your recollection the

Jonathan Rubin

Ana, it's things. move adjusters One, risk themselves risk the their population. the of by couple Jon. adjusters, A with nature, just with

we build a reflect terms best that. in adjusters into outlook said diversion commentary our in that to expecting on perfect risk for changes our estimates any high-level Having of world, - material period the that, from we gave So not the our period and of estimates we're best from model, utilization. the in really XXXX

that we higher lower small picture be the impact it can describes. overall it than or won't things while So, expected by amounts,

Anagha Gupte

would what you kind say low of Off And is mid-single? single, baseline? - of modest is that

Jonathan Rubin

the sorry, still plan. finalizing we're I'm

December, tuned. detail. again, we'll So And we'll growth. have modest in comfortable a give to it, early stay have more the we're terms dimensioning in you'll lot But of

Anagha Gupte

assessments, was on got health basis? the a go-forward that what of your the and parity your I All look what the And Does lot a - I Then health behavioral at of a right firstly had first couple around of Okay, it. weaken Order - thoughts benefits? are just there's had it questions question Care does controversy and Complete now you that? it does Executive enforcement around, essential as to just weaken mental right.

Barry Smith

portion did illness long-term so looking parity marketplace state-based, short-term part the an first. given essential the will Well, consider, change that of policies been likely were some typically policies. would Much Orders address of more has Executive not for health for through serious plans to be behavioral a mental have years. asked if someone that impact regulation are is at they as population oriented. They those the question in feel that that would focused the impact year. proposed federal Ana, approved the in Order it mental the those parity is I'll his Executive think will a and clearly, are that on likely forward. were won't mental Relative the benefits, policies we to of policies and/or short-term up really or health. And not that the someone as have second We that think on legislation initiatives also or home, designed with that last health agencies that We health the to on going many be Trump

of have think illness. population that or So major while greater to the benefit - the think access we particularly to the segment mental a Complete we and provide the in for market, either individual our don't legislation intended more relative is impact serious on business Care to Magellan it coverage by the will SMI individuals,

Anagha Gupte

but abuse? not I - And holders you, it's what the would you with for Which think. Maybe about policy aligned is more thing probably weaken think? not that would short-term type coverage, biggest that's substance

Barry Smith

recent across and a announcement terrible issue. the tragedy this of terms abuse country, additional in it's the of focus huge with lives emerging The opioid on taking

direction some a is doing you and are forward. won't substantial the House, a we funding the hopefully President's solutions see do for funded. in at going Clearly, Now rather and It look help unique capabilities dialogue fashion - opioid for have thing address the we to that. we requests a issue. from great population and provide also and part legislation do the understand - And We clearly, help funding robust attention will happy addressed of of you alternatives the applaud is be take the are if side the some the and focusing that to him other it continue very to until epidemic. help and is

funding will not that As lot stands short-term a right impact the think though, therefore, incremental be so, of now, we is minimal. it there

Anagha Gupte

of And hearing the Is from provider, and behavioral, from what Okay, As Medicaid what have channel they floor somewhere? and privates in yourself? stay. we've talk stay, checks a marketplace the can length How one On pressure that? both been competitors I and great. Then you this a of your behavioral with to do health then are seeing final continue? around one likely And managed you a controversial length that is natural on and it trend? and profits see around are public if some feedback your may. for thoughts about not

Jonathan Rubin

potentially this at we're mean, Jon. issues isolated than we're competitors, all. Other anything. material with some not I Ana, anything is seeing not Yes. seeing

has length some stay, been Our in areas, in it, fact, we've we've pretty been stable. improvements. managed of as And able drive to

So that own we really our in business. book seen of haven't

Anagha Gupte

that this Okay, it's the potential views what to yourself. hypothetical terms utilizations, with pricing would I add great. point, but at or mean, drug just CVS-Aetna of I you just in switch and/or the kind Can home us pharmacy? I on or Can you of I value know specialty Aetna contracts Future this pharmacy deal? whatever, your thoughts health? guess, as do give

Barry Smith

global [mini but that that this to to to the pharmacy, more to what Well, would strategy your provide include at mean. of that And would you not mine terms a as a good healthcare only that, this say Ana, I'll course, look of some like When in is ability is as deal outpatient-based. clinics] other the of also delivery likelihood share volume, clearly take just a thoughts. to system a would a benefit services complete you be guess have its and and drive

not at it have And don't interesting they patients a as rate, outpatient very standpoint, - very generally. play can that from you to interesting contract think very care Aetna a can invest on effective it's buildings lower house clearly, if very a you're a I that rate, if to at a - be strategy. in does,

really just impact. its buying has in would if into flux. at getting that players access major, that, example, clearly, standpoint, others. People player of know drug, specialty Anthem, game these drug is think medication are is all. The entities a it like about impact major terms reality It's and Again, business specialty to don't the the players merger, massive talk management. a we that have major Aetna, that have Amazon, major and from much CVS just changes happens, don't it on We the In today world like our capacity. for

volume. And - so typically dwarf size and in in of our that they're terms obviously, they clients not capabilities our

so you Clearly, as wholesalers. the the they're for pharmacy about in so a maybe something CVS And it think world, large. when provider means

and If you they about typical the Walgreens system. CVS think that bypass wholesaler

impact the independent And chain on than supply does so it us think on it PBM. as more an I has

think it's to and it be we'll very play an I curious all ends see up. where interesting

Anagha Gupte

final one. helpful. most And that's Great, one

to you with chose perhaps they Would retailers channel do? agnostic, PBMs even drop network? if to And to remain like they Or a and Amazon. alluded prevent Would risk you think? Amazon? Amazon force what try that a PBM other goes would the to see need You you partner they or as to narrower this to, captive out feel to wanting would

Barry Smith

inbound. of I'm all, you'd doorstep, Amazon of And a see if fan. first saw a Well, my big you boxes lot

to all, does but and buying Amazon to different So has player comes think together. supply everybody's try larger everybody I capacity, is chain a it's I talking out tremendous. there, great - figure entities it's I model. this it at clearly do do partnerships When don't think so great terms I so the They're safe think to potential with a and does what existing of Walgreens. in they tremendous say that that fits CVS any to And to strength. how think fundamentally delivery. that's out

it like doesn't materially standpoint, that really guys us. from the for So game change

focused of are in We use. terms medications proper on clinically-based, therapeutic the of cost - therapeutic

think of don't inherently ways, a and see and way. the as positive is able we Amazon negative. cost-effective delivery a the positive what we And can client's or to entry some get fact, do for that big in express home we it in to So very being in

or us. impact ability entities I don't impacts think just think the Amazon Amazon would them. larger We partner but Walgreens, that pharmacy there, do - like that really to we CVS the has would Amazon even see So maybe with

So who knows?

Anagha Gupte

useful. very Barry, perspectives your Yes, always are Thanks helpful.

Barry Smith

you. You thank bet Ana,

Joe Bogdan

we Joe. is Do questions? other this Operator, have any

Operator

questions. further Currently, are sir, no there

Barry Smith

thank we Good our us joining and quarter giving talking again view of forward our today of call. for Great. to XXXX. you day. on Well all the look you first We

Operator

today's conference you call. concludes very participation. And that for Thank much your

disconnect You this Have great may now a day. time. at

Magellan Health (MGLN) 4 Nov 172017 Q3 Earnings call transcript