Magellan Health, Inc. (NASDAQ:MGLN) Q3 2018 Earnings Conference Call Transcript
Nov 07, 2018 • 06:30 am ET
Welcome, and thank you for standing by for the Third Quarter 2018 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 Mr. Joe Bogdan. Thank you, sir. You may begin.
Good morning, and thank you for joining Magellan Health's Third Quarter 2018 Earnings Call. With me today are Magellan's Chairman and CEO, Barry Smith; and our CFO, Jon Rubin.
The press release announcing our third quarter earnings was distributed this morning. A replay of this call will be available shortly after the conclusion of the call through December 7th. The numbers to access the replay are in the earnings release. For those who listen to the rebroadcast of this presentation, we remind you that the remarks made herein are as of today, Wednesday, November 7, 2018, and have not been updated subsequent to the initial earnings call.
(Forward-Looking Cautionary Statements)
In addition, please note that Magellan uses certain non-GAAP financial measures when describing our financial results. Specifically, we refer to segment profit, adjusted net income and adjusted EPS, which are defined in our SEC filings and in today's press release. Segment profit is equal to net revenues less the sum of cost of care, cost of goods sold, direct service costs and other operating expenses and includes income from unconsolidated subsidiaries, but excludes segment profit from non-controlling interests held by other parties, stock compensation expense, special charges or benefits as well as changes in fair value of contingent consideration recorded in relation to acquisitions. Adjusted net income and adjusted EPS reflect certain adjustments made for acquisitions completed after January 1, 2013, to exclude non-cash stock compensation expense resulting from restricted stock purchases by sellers, changes in the fair value of contingent consideration, amortization of identified acquisition intangibles, as well as impairment of identified acquisition intangibles.
Please refer to the tables included with this morning's press release, which is available on our website for a reconciliation of these non-GAAP financial measures to the corresponding GAAP measures.
I will now turn the call over to our Chairman and CEO, Barry Smith. Barry?
On our call this morning, I'll discuss the following topics. First, I'm going to comment on the financial results for the quarter and our reduction to 2018 guidance. Second, I'll make some observations about our growth, success in winning new business and integrating acquisitions. I'll also discuss challenges that we faced along the way. Third, I'll provide an update of some of the operational highlights from the third quarter. Finally, I will share our current focus -- areas of focus of each business before transitioning to Jon's detailed financial update.
For the third quarter of 2018, we reported net revenue of $1.9 billion, net income of $27.1 million and EPS of $1.09 per share. Our adjusted net income was $36.2 million, or $1.45 per share. And we achieved segment profit of $88.3