Profile: Magellan Health Services, Inc. (MGLN.O)

Magellan Health Services, Inc. (Magellan), incorporated in 1969, is engaged in the specialty managed healthcare business. Magellan provides services to health plans, insurance companies, corporations, labor unions and various governmental agencies. The Company’s business is divided into five segments: Managed Behavioral Healthcare, Radiology Benefits Management, Specialty Pharmaceutical Management, and Corporate and Other. In July 2009, In July 2009, Coventry Health Care, Inc. announced that it has completed its previously announced divestiture of First Health Services Corporation (FHSC) to Magellan.

Managed Behavioral Healthcare

The managed behavioral healthcare business reflects the Company’s coordination and management of the delivery of behavioral healthcare treatment services that are provided through its contracted network of third-party treatment providers, which includes psychiatrists, psychologists, other behavioral health professionals, psychiatric hospitals, general medical facilities with psychiatric beds, residential treatment centers and other treatment facilities. The treatment services provided through the Company’s provider network include outpatient programs (such as counseling or therapy), intermediate care programs (such as intensive outpatient programs and partial hospitalization services), inpatient treatment and crisis intervention services. The Company generally does not directly provide, or own any provider of, treatment services.

Magellan provides its management services primarily through risk-based products, where the Company assumes all or a portion of the responsibility for the cost of providing treatment services in exchange for a fixed per member per month fee, administrative services only (ASO) products, where the Company provides services, such as utilization review, claims administration and/or provider network management, but does not assume responsibility for the cost of the treatment services, and employee assistance programs (EAPs) where the Company provides short-term outpatient behavioral counseling services.

The Managed Behavioral Healthcare Commercial segment (Commercial) reflects managed behavioral healthcare services and EAP services provided under contracts with managed care companies, health insurers and other health plans for some or all of their commercial, Medicaid and Medicare members, as well as with employers, including corporations and governmental agencies and labor unions. Commercial’s managed behavioral healthcare contracts encompass risk-based, ASO and EAP arrangements. This segment contains the operating segments previously defined as the Managed Behavioral Healthcare Health Plan Segment (Health Plan) and the Managed Behavioral Healthcare Employer segment (Employer).

The Managed Behavioral Healthcare Public Sector segment (Public Sector) generally reflects managed behavioral healthcare services provided to Medicaid recipients under contracts with state and local governmental agencies. Public Sector contracts encompass either risk-based or ASO arrangements. As of December 31, 2008, Public Sector’s covered lives were 1.8 million and 0.3 million for risk-based and ASO products, respectively.

Radiology Benefits Management

The Company’s Radiology Benefits Management segment reflects the management of the delivery of diagnostic imaging services. Magellan’s radiology benefits management services are provided through contracts with managed care companies, health insurers and other health plans for commercial, Medicaid and Medicare members. The Company offers its radiology benefits management services through ASO contracts, where the Company provides services, such as utilization review and claims administration. The Company’s two risk-based radiology benefits management contracts became effective June 1, 2007 and July 1, 2007, respectively. As of December 31, 2008, covered lives for Radiology Benefits Management were 2.6 million and 13.9 million for risk-based and ASO products, respectively.

Specialty Pharmaceutical Management

The Company’s Specialty Pharmaceutical Management segment reflects the management of specialty drugs used in the treatment of cancer, multiple sclerosis, hemophilia, infertility, rheumatoid arthritis, chronic forms of hepatitis and other diseases. Specialty pharmaceutical drugs represent injectible, infused, oral or inhaled drugs. The Company’s specialty pharmaceutical services include the distribution of specialty pharmaceutical drugs on behalf of health plans, providing consulting services to health plans and pharmaceutical manufacturers and providing oncology management services to health plans. The Company’s Specialty Pharmaceutical Management segment had contracts with 40 health plans as of December 31, 2008.

Corporate and Other

Corporate and Other segment of Magellan comprises primarily operational support functions, such as sales and marketing and information technology. It also includes corporate support functions, such as executive, finance, human resources and legal.