UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported):

September 1, 2016

 

MAGELLAN HEALTH, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Registrant’s telephone number, including area code: (602) 572-6050

 

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Item 8.01. Other Matters

 

Magellan Health, Inc. (the “Company”) and a customer in its Pharmacy Management segment have mutually agreed to the early termination of most of the services under a pharmacy benefit management (“PBM”) contract, effective September 1, 2016.  The customer recently entered into a strategic partnership with another entity, and these two parties desired to consolidate services under the partner entity’s preferred partner.  The Company provided traditional PBM services and certain specialty drug formulary managment services for this customer.  The PBM services portion of the contract had a termination date of December 31, 2016. The Company is in discussions with the customer related to the remaining specialty drug formulary management services under the contract, as well as potentially providing new specialty drug management services to the customer.  For the year ended December 31, 2015 and six months ended June 30, 2016, the Company had revenues of $324.8 million and $194.0 million, respectively, from this customer, of which the vast majority reflects drug acquisition cost related to PBM services.  Due to the nature of the population covered, the PBM contract generated a margin that is lower than the Company’s average margin for PBM contracts, and the termination is not expected to impact the Company’s 2016 guidance.

 

Cautionary Statement

 

This 8-K contains forward-looking statements within the meaning of the Securities Exchange Act of 1934 and the Securities Act of 1933, as amended, which involve a number of risks and uncertainties. All statements, other than statements of historical information provided herein, may be deemed to be forward-looking statements including, without limitation, statements regarding the expected impact of the PBM contract on the Company’s 2016 guidance. These statements are based on management’s analysis, judgment, belief and expectation only as of the date hereof, and are subject to uncertainty and changes in circumstances. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” “may,” “should,” “could,” “estimate,” “intend” and other similar expressions are intended to identify forward-looking statements. Actual results could differ materially due to, among other things, the possible election of certain of the company’s customers to manage the healthcare services of their members directly; changes in rates paid to and/or by the company by customers and/or providers; higher utilization of health care services by the company’s risk members; delays, higher costs or inability to implement new business or other company initiatives; the impact of changes in the contracting model for Medicaid contracts; termination or non-renewal of customer contracts; the impact of new or amended laws or regulations; governmental inquiries; litigation; competition; operational issues; health care reform; and general business conditions. Additional factors that could cause actual results to differ materially from those reflected in the forward-looking statements include, but are not limited to, the risks discussed in the “Risk Factors” section included within the company’s Annual Report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission on February 29, 2016, and the company’s subsequent Quarterly Reports on Form 10-Q filed during 2016. Readers are cautioned not to place undue reliance on these forward-looking statements. The company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date of this Current Report on Form 8-K.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

MAGELLAN HEALTH, INC.

 

 

Date: September 1, 2016	By:	/s/ Jonathan N. Rubin
		Name: Jonathan N. Rubin
		Title: Executive Vice President and Chief Financial Officer

 

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