Shares of Magellan Health, formerly Magellan Health Services, tumbled considerably in morning trading after the Avon, Conn.-based healthcare management company reported lower-than-expected earnings and revenue, the result in part of a major contract loss in Arizona.
Analysts said Magellan's earnings per share of 18 cents “badly missed” the general consensus of 57 cents, and they “highlight potential execution risk.”
Magellan's public-sector business was the primary driver behind the weaker second-quarter financials, executives said on a call with investors Friday morning. Effective March 31, Magellan lost its contract with Maricopa County in Arizona to provide behavioral health management services to 680,000 people—a contract that represented $201 million in revenue in the first quarter this year.