-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Af4sHezAY7wMhWWX7ZgOf5kQ8CHJUE9+FGHRzlnKLXm0Tl64tRPCsrJpOq9DeG6G +Phclen/hL/rwxPuDGno6w== 0000902664-08-001573.txt : 20080318 0000902664-08-001573.hdr.sgml : 20080318 20080317183319 ACCESSION NUMBER: 0000902664-08-001573 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20080318 DATE AS OF CHANGE: 20080317 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MAGELLAN HEALTH SERVICES INC CENTRAL INDEX KEY: 0000019411 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOSPITALS [8060] IRS NUMBER: 581076937 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-12251 FILM NUMBER: 08694468 BUSINESS ADDRESS: STREET 1: 6950 COLUMBIA GATEWAY STREET 2: STE 400 CITY: COLUMBIA STATE: MD ZIP: 21046 BUSINESS PHONE: 4109531000 FORMER COMPANY: FORMER CONFORMED NAME: CHARTER MEDICAL CORP DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HealthCor Management, L.P. CENTRAL INDEX KEY: 0001343781 IRS NUMBER: 202893581 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 152 WEST 57TH STREET, 47TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 212-622-7888 MAIL ADDRESS: STREET 1: 152 WEST 57TH STREET, 47TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 SC 13D 1 p08-0759sc13d.txt MAGELLAN HEALTH SERVICES INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 Magellan Health Services Inc. ---------------------------------------------------------------------- (Name of Issuer) Common Stock, $0.01 Par Value Per Share ---------------------------------------------------------------------- (Title Class of Securities) 559079207 ---------------------------------------------------------------------- (CUSIP Number) HealthCor Management, L.P. Carnegie Hall Tower 152 West 57th Street, 47th Floor New York, New York 10019 Attention: Mr. Steven J. Musumeci (212) 622-7888 With a Copy to: Marc Weingarten Schulte Roth & Zabel LLP 919 Third Avenue New York, New York 10022 (212) 756-2280 ---------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) March 14, 2008 ---------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. [X] CUSIP NO. 559079207 13D Page 2 of 16 Pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION OF ABOVE PERSON HealthCor Management, L.P. 20-2893581 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 2,750,000 EACH ------------------------------------------------------------ REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 0 ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 2,750,000 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,750,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.83% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - -------------------------------------------------------------------------------- CUSIP NO. 559079207 13D Page 3 of 16 Pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION OF ABOVE PERSON HealthCor Associates, LLC 20-2891849 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 2,750,000 EACH ------------------------------------------------------------ REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 0 ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 2,750,000 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,750,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.83% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON OO- limited liability company - -------------------------------------------------------------------------------- CUSIP NO. 559079207 13D Page 4 of 16 Pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION OF ABOVE PERSON HealthCor Offshore, Ltd. N/A - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 1,850,122 EACH ------------------------------------------------------------ REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 0 ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 1,850,122 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,850,122 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 4.59% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON OO-limited company - -------------------------------------------------------------------------------- CUSIP NO. 559079207 13D Page 5 of 16 Pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION OF ABOVE PERSON HealthCor Hybrid Offshore, Ltd. N/A - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 387,267 EACH ------------------------------------------------------------ REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 0 ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 387,267 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 387,267 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) .96% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON OO-limited company - -------------------------------------------------------------------------------- CUSIP NO. 559079207 13D Page 6 of 16 Pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION OF ABOVE PERSON HealthCor Group, LLC 51-0551771 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 512,611 EACH ------------------------------------------------------------ REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 0 ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 512,611 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 512,611 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.27% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON OO-limited liability company - -------------------------------------------------------------------------------- CUSIP NO. 559079207 13D Page 7 of 16 Pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION OF ABOVE PERSON HealthCor Capital, L.P. 51-0551770 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 512,611 EACH ------------------------------------------------------------ REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 0 ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 512,611 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 512,611 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.27% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - -------------------------------------------------------------------------------- CUSIP NO. 559079207 13D Page 8 of 16 Pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION OF ABOVE PERSON HealthCor L.P. 20-3240266 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 512,611 EACH ------------------------------------------------------------ REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 0 ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 512,611 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 512,611 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.27% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - -------------------------------------------------------------------------------- CUSIP NO. 559079207 13D Page 9 of 16 Pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION OF ABOVE PERSON Arthur Cohen - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 2,750,000 EACH ------------------------------------------------------------ REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 0 ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 2,750,000 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,750,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.83% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- CUSIP NO. 559079207 13D Page 10 of 16 Pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION OF ABOVE PERSON Joseph Healey - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 2,750,000 EACH ------------------------------------------------------------ REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 0 ------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 2,750,000 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,750,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.83% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- CUSIP NO. 559079207 13D Page 11 of 16 Pages ITEM 1. SECURITY AND ISSUER This statement on Schedule 13D relates to the shares ("Shares") of common stock, $0.01 par value, of Magellan Health Services Inc. (the "Issuer"), a Delaware corporation. The principal executive office of the Issuer is located at 55 Nod Road, Avon, Connecticut 06001. ITEM 2. IDENTITY AND BACKGROUND (a) - (c), (f) This statement is being filed by the following: (i) HealthCor Management, L.P., a Delaware limited partnership, Carnegie Hall Tower, 152 West 57th Street, 47th Floor New York, New York 10019; (ii) HealthCor Associates, LLC, a Delaware limited liability company, Carnegie Hall Tower, 152 West 57th Street, 47th Floor New York, New York 10019; (iii) HealthCor Offshore, Ltd., a Cayman Islands limited company, Carnegie Hall Tower, 152 West 57th Street, 47th Floor New York, New York 10019; (iv) HealthCor Hybrid Offshore, Ltd., a Cayman Islands limited company, Carnegie Hall Tower, 152 West 57th Street, 47th Floor New York, New York 10019; (v) HealthCor Group, LLC, a Delaware limited liability company, Carnegie Hall Tower, 152 West 57th Street, 47th Floor New York, New York 10019; (vi) HealthCor Capital, L.P., a Delaware limited partnership, Carnegie Hall Tower, 152 West 57th Street, 47th Floor New York, New York 10019; (vii) HealthCor, L.P., a Delaware limited partnership, Carnegie Hall Tower, 152 West 57th Street, 47th Floor New York, New York 10019; (viii) Joseph Healey; Carnegie Hall Tower, 152 West 57th Street, 47th Floor New York, New York 10019; and (ix) Arthur Cohen, 12 South Main Street, #203 Norwalk, Connecticut 06854. Both Mr. Healey and Mr. Cohen are United States citizens. HealthCor, L.P., HealthCor Offshore, Ltd. and HealthCor Hybrid Offshore, Ltd. (the "HealthCor Funds") are the three beneficial owners of the Common Stock. The investment manager of each of these funds is HealthCor Management, L.P. HealthCor Associates, LLC is the general partner of HealthCor Management, L.P. and Arthur Cohen and Joseph Healey are the managers of HealthCor Associates, LLC. The general partner of HealthCor, L.P. is HealthCor Capital, L.P. and the general partner of HealthCor Capital, L.P. is HealthCor Group, LLC. Collectively, the foregoing entities and individuals will be referred to as "HEALTHCOR" or the "Reporting Persons". The principal business of HealthCor is the providing of investment advisory services to the HealthCor Funds. No officer or director of HealthCor other than Messrs. Healey and Cohen holds a controlling number of ownership shares or membership interests or has voting or investment power. (d) - (e) During the last five years, no member of HealthCor has been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order CUSIP NO. 559079207 13D Page 12 of 16 Pages enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION The total amount HealthCor has paid for the 2,750,000 Shares reported herein is $110,639,992.76. The Shares were paid for by cash provided by the HealthCor Funds that are managed by HealthCor Management, L.P. Such cash consists of capital contributions from investors in the HealthCor Funds and the capital appreciation thereon. ITEM 4. PURPOSE OF TRANSACTION The Reporting Persons originally acquired Shares of for investment in the ordinary course of business because they believed that the Shares, when purchased, were undervalued and represented an attractive investment opportunity. The Reporting Persons were originally passive investors who reported their Common Stock ownership on a form Schedule 13G filed with the Securities and Exchange Commission (the "SEC") on August 6, 2008, as thereafter amended. Realizing that the Issuer was not maximizing shareholder value, the Reporting Persons sent the Issuer a letter on March 14, 2008, setting forth their strategy for improving such value, and thereby became obligated to file this Schedule 13D. The letter sent by the Reporting Persons praised the Issuer's growth but noted as problematic the Issuer's previously-announced plan to diversify by using its high cash balances to make strategic acquisitions. The Reporting Persons noted the flaws in this strategy, citing the market's recent negative reaction to transactions considered to be "empire building" acquisitions. The Reporting Persons expressed their view that the best means of maximizing the Issuer's large accrued balances at this time is by paying the cash back to the shareholders, whether it be through a dividend or through some comparable means. A copy of the March 14, 2008 letter is attached as Exhibit 2 hereto and is incorporated by reference. Except as set forth herein or as would occur upon completion of any of the actions discussed herein, including in any Exhibits hereto, the Reporting Persons have no present plan or proposal that would relate to or result in any of the matters set forth in subparagraphs (a)-(j) of Item 4 of Schedule 13D. The Reporting Persons intend to review their investment in the Issuer on a continuing basis and may engage in discussions with management, the board of directors, other shareholders of the Issuer and other relevant parties concerning the business, operations, management, strategy and future plans of the Issuer. Depending on various factors including, without limitation, the Issuer's financial position and strategic direction, the outcome of the discussions and actions referenced above, actions taken by the board of directors, price levels of the Shares, other investment opportunities available to the Reporting Persons, conditions in the securities market and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate including, without limitation, purchasing additional Shares or selling some or all of their Shares, engaging in short selling of or any hedging or similar transactions with respect to the Shares and/or otherwise changing their intention with respect to any and all matters referred to in Item 4 of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) - (b) As of March 14, 2008, the Reporting Persons beneficially own in the aggregate 2,750,000 Shares which represents approximately 6.83% of the Issuer's Common Stock outstanding. The aggregate percentage beneficially owned by the Reporting Persons is based upon 40,280,161 Shares of the Issuer issued and outstanding as of December 31, 2007, as reported in the Issuer's 10-K filed for the fiscal year ending December 31, 2007. The HealthCor Funds are the beneficial owners of the Shares of the Issuer. As the investment manager of each of these funds, HealthCor Management, L.P. may also be deemed to be the beneficial owner of the Shares. CUSIP NO. 559079207 13D Page 13 of 16 Pages As the general partner of HealthCor, L.P., HealthCor Capital, L.P., and its general partner, HealthCor Group, LLC, may be deemed the beneficial owners of that portion of the Shares beneficially owned by HealthCor, L.P. HealthCor Associates, LLC, the general partner of HealthCor Management, L.P., may also be deemed to be the beneficial owner of the Shares. The managers of HealthCor Associates, LLC, Arthur Cohen and Joseph Healey, have both voting and investment power with respect to the Shares reported herein, and therefore may also be deemed to be the beneficial owners of the Shares. As a result of the foregoing, HealthCor comprises a "group" within the meaning of Section 13(d)(3) of the Exchange Act. The filing of this Statement and any future amendment by HealthCor, and the inclusion of information herein or therein with respect to HealthCor Associates, LLC, HealthCor, L.P., HealthCor Offshore, Ltd., HealthCor Hybrid Offshore, Ltd., HealthCor Capital, L.P., HealthCor Group, LLC, and Messrs. Cohen and Healey, shall not be considered an admission that any of such persons, for the purpose of Section 16(b) of the Exchange Act, are the beneficial owners of any Shares in which such persons do not have a pecuniary interest. HealthCor Associates, LLC, HealthCor, L.P., HealthCor Offshore, Ltd., HealthCor Hybrid Offshore, Ltd., HealthCor Capital, L.P., HealthCor Group, LLC and Messrs. Cohen and Healey disclaim any beneficial ownership of the Shares covered by this Schedule 13D. (c) The following transactions in the Shares were effected by the Reporting Persons during the past 60 days, each of which was effected in open market transactions. HealthCor, L.P. Trade Shares Price per Date Purchased(Sold) Share 2/26/2008 6,923.00 43.27 2/26/2008 4,651.00 43.35 2/26/2008 22,328.00 43.37 2/26/2008 3,311.00 43.51 2/29/2008 9,303.00 43.52 3/3/2008 27,910.00 42.13 3/6/2008 19,025.00 40.81 3/7/2008 9,512.00 40.49 3/11/2008 9,512.00 38.61 3/13/2008 9,512.00 38.70 HealthCor Offshore, Ltd. Trade Shares Price per Date Purchased(Sold) Share 2/26/2008 25,067.00 43.27 2/26/2008 16,848.00 43.35 CUSIP NO. 559079207 13D Page 14 of 16 Pages 2/26/2008 80,864.00 43.37 2/26/2008 11,994.00 43.51 2/29/2008 33,694.00 43.52 3/3/2008 101,080.00 42.13 3/6/2008 67,110.00 40.81 3/7/2008 33,556.00 40.49 3/11/2008 33,556.00 38.61 3/13/2008 33,556.00 38.70 HealthCor Hybrid Offshore, Ltd. Trade Shares Price per Date Purchased(Sold) Share 2/26/2008 5,210.00 43.27 2/26/2008 3,501.00 43.35 2/26/2008 16,808.00 43.37 2/26/2008 2,495.00 43.51 2/29/2008 7,003.00 43.52 3/3/2008 21,010.00 42.13 3/6/2008 13,865.00 40.81 3/7/2008 6,932.00 40.49 3/11/2008 6,932.00 38.61 3/13/2008 6,932.00 38.70 (d) No person, other than the Reporting Persons, has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, such Shares . (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER To the best knowledge of HealthCor, there are no contracts, arrangements, understandings or relationships (legal or otherwise) among the Repoting Persons and between such persons, and any other person, with respect to any securities of the Issuer, including, but not limited to, transfer or voting of any of the securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, divisions of profits or loss, or the giving or withholding of proxies. CUSIP NO. 559079207 13D Page 15 of 16 Pages ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Exhibit 1. Joint Filing Agreement, dated as of March 17, 2008 among HealthCor Management, L.P., HealthCor Associates, LLC, HealthCor, L.P., HealthCor Offshore, Ltd., HealthCor Hybrid Offshore, Ltd., HealthCor Capital, L.P., HealthCor Group, LLC, Joseph Healey and Arthur Cohen. Exhibit 2. Letter from the Reporting Persons to the Issuer's Board of Directors, dated March 14, 2008 CUSIP NO. 559079207 13D Page 16 of 16 Pages SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: March 17, 2008 HEALTHCOR MANAGEMENT, L.P., FOR ITSELF HEALTHCOR ASSOCIATES, LLC AND AS MANAGER ON BEHALF OF (I) HEALTHCOR OFFSHORE, LTD. AND (II) HEALTHCOR HYBRID OFFSHORE, LTD. By: /s/ Steven J. Musumeci ------------------------------ By: HealthCor Associates, LLC, its general Name: Steven J. Musumeci partner Title: Chief Operating Officer By: /s/ Steven J. Musumeci ------------------------------ Name: Steven J. Musumeci HEALTHCOR GROUP, LLC Title: Chief Operating Officer By:/s/ Steven J. Musumeci ------------------------------- HEALTHCOR CAPITAL, L.P., FOR ITSELF AND Name: Steven J. Musumeci AS GENERAL PARTNER ON BEHALF OF Title: Chief Operating Officer HEALTHCOR, L.P. By: HealthCor Group, LLC, its general /s/ Joseph Healey partner ---------------------------------- JOSEPH HEALEY, Individually By: /s/ Steven J. Musumeci ------------------------------ /s/ Arthur Cohen Name: Steven J. Musumeci ---------------------------------- Title: Chief Operating Officer ARTHUR COHEN, Individually EXHIBIT INDEX Exhibit 1. Joint Filing Agreement, dated as of March 17, 2008 among HealthCor Management, L.P., HealthCor Associates, LLC, HealthCor, L.P., HealthCor Offshore, Ltd., HealthCor Hybrid Offshore, Ltd., HealthCor Capital, L.P., HealthCor Group, LLC, Joseph Healey and Arthur Cohen. Exhibit 2. Letter from the Reporting Persons to the Issuer's Board of Directors, dated March 14, 2008 Exhibit 1 AGREEMENT OF JOINT FILING The undersigned acknowledge and agree that the foregoing statement on Schedule 13D is filed on behalf of each of the undersigned and that all subsequent amendments to this statement on Schedule 13D shall be filed on behalf of each of the undersigned without the necessity of filing additional joint acquisition statements. The undersigned acknowledge that each shall be responsible for the timely filing of such amendments, and for the completeness and accuracy of the information concerning him or it contained therein, but shall not be responsible for the completeness and accuracy of the information concerning the others, except to the extent that he or it knows or has reason to believe that such information is inaccurate. Date: March 17, 2008 HEALTHCOR MANAGEMENT, L.P., FOR ITSELF HEALTHCOR ASSOCIATES, LLC AND AS MANAGER ON BEHALF OF (I) HEALTHCOR OFFSHORE, LTD. AND (II) HEALTHCOR HYBRID OFFSHORE, LTD. By: /s/ Steven J. Musumeci ------------------------------ By: HealthCor Associates, LLC, its general Name: Steven J. Musumeci partner Title: Chief Operating Officer By: /s/ Steven J. Musumeci ------------------------------ Name: Steven J. Musumeci HEALTHCOR GROUP, LLC Title: Chief Operating Officer By:/s/ Steven J. Musumeci ------------------------------- HEALTHCOR CAPITAL, L.P., FOR ITSELF AND Name: Steven J. Musumeci AS GENERAL PARTNER ON BEHALF OF Title: Chief Operating Officer HEALTHCOR, L.P. By: HealthCor Group, LLC, its general /s/ Joseph Healey partner ---------------------------------- JOSEPH HEALEY, Individually By: /s/ Steven J. Musumeci ------------------------------ /s/ Arthur Cohen ---------------------------------- Title: Chief Operating Officer ARTHUR COHEN, Individually EX-99 2 p08-0759exhibit99.txt MAGELLAN HEALTH SERVICES, INC. Exhibit 2 March 14, 2008 VIA OVERNIGHT COURIER Magellan Health Services, Inc. 55 Nod Road Avon, CT 06001 Attn: Rene Lerer, President, Chief Executive Officer, Director Steven J. Shulman, Chairman Allen F. Wise, Director William D. Forrest, Director Michael P. Ressner, Director William J. McBride, Director Michael S. Diament, Director Barry M. Smith, Director Robert M. Le Blanc, Director Members of the Board of Directors: By way of background, HealthCor Management, L.P. is the investment adviser to private investment funds that currently own 2,750,000 shares, representing 6.8% of Magellan Health Services, Inc.'s ("Magellan" or the "Company") outstanding shares. We are the Company's third largest shareholder. We were pleased with Magellan's 42.7% revenue growth in the December quarter and 29.9% growth in the September quarter, which compares to 5.7% growth in the fourth quarter of 2006 and a 5.5% decline in the third quarter of 2006. We view the Maricopa County behavioral health contract win as continuing evidence of the Company's high quality reputation, experience and product breadth in the behavioral health sector. These developments illustrate the potential for continued growth in the public sector solutions segment and reduce the need for additional diversification through acquisitions, in our view. For the first time since emerging from the bankruptcy, Magellan had a breakout year with revenue growth in the double digits (and is set to have a second one in 2008). Despite this return to growth, Magellan's stock has been flat to down for the past two years (last night's closing price of $39.13 is 10.3% below the two-year average of $43.60). The Maricopa win, coupled with the Company's strengthening balance sheet and ongoing cash flow generation, has allowed us to refine our valuation analysis and price target. We believe that the Company is worth well in excess of both the Company's current stock price ($39.13 per share) and the published price targets of various sell-side analysts, including Credit Suisse and Lehman, who, with $55 price targets, are the highest on the Street. We presume that management shares our belief that the Company's shares are undervalued. As of December 31, 2007, Magellan maintained $353.6 million of unrestricted cash and investments and $14.0 million of debt on its balance sheet. Moreover, guidance for 2008 anticipates a net increase in cash and investments to $490 - $547 million by year-end, reflecting net unrestricted cash and investments of $504 million at the midpoint. This represents 32% of the Company's current market capitalization. Given the high unrestricted cash balance and management's expectations for 2008 cash flow generation, combined with management's high visibility on near term revenue growth, Magellan is clearly not facing any liquidity risk. Moreover, considering that cash generates a return far below that of the Company's core businesses, we believe that Magellan is diluting its ability to generate greater levels of return on the capital provided to it by its shareholders. While cash has been building on Magellan's balance sheet for the past few years, return on equity ("ROE") to shareholders has declined. Magellan generated substantial operating cash flow ("OCF") of $194.6 million in 2007 and Management guidance of $183 - $229 million in OCF for 2008 reinforces the continuing strength anticipated in cash flow generation. Additionally, Magellan has minimal working capital requirements (management guidance of $12 - $32 million usage of cash for working capital in 2008) and minimal capital expenditure requirements ($47.6 million in 2007 and guidance of $30 - $40 million for 2008), indicating little need for capital infusion to grow the base business. Since 2007 capex and OCF include Maricopa start-up costs, we understand that 2008 guidance is more indicative of the anticipated run rate of cash flow generation. Although management has previously highlighted acquisitions as the primary use of cash as a means for diversifying and growing the platform, we feel that the acquisitions of National Imaging Associates and ICORE in 2006 accomplished these goals. These new businesses also reduce Magellan's exposure to any one contract. In fact, the revenue generated from the TennCare East and West contracts, which is estimated to be $256 million annually, will likely be less than 10% of total Company revenue in 2009. In addition, the underperformance of ICORE since its acquisition makes us cautious about future acquisitions that are consummated for the sake of diversification; we do not see a strategic reason for entering the specialty pharmaceutical distribution business. ICORE's 4Q 2007 results were significantly below expectations with $4.6 million in segment profit vs. ~$4.9 million expected despite stronger than expected revenue ($49.6 million vs. ~$47 million expected). We see no reason to waste more capital for the sake of GRANDEUR. The Company's platform is fine. Furthermore, Wellpoint's acquisition of American Imaging Management provides NIA with incremental organic growth opportunities thereby reducing the need to roll up the radiology management industry. In addition, we find it concerning that a company of Magellan's size has an executive solely appointed to lead an M&A strategy and spend shareholder money. We believe strategic decisions can be made by the CEO, the CFO and the Board. Magellan noted on its 2Q 2007 conference call that the Company has "access to about $1.25 to $1.5 billion through free cash generated and leveraging" its earnings. In the absence of additional acquisitions at reasonable valuations, the cash continues to build (and sit) on the balance sheet generating poor returns. Therefore, we believe at this time returning cash to shareholders would be the best means of maximizing value. This objective could be achieved in a variety of ways, I.E., special or recurring dividend, stock buy-back, etc. In any event, we recommend that the Company immediately utilize $300 million of its substantial, excess cash resources and return it to its shareholders. Although we understand management's concerns regarding difficult conditions in the credit market, we do not believe this should be used as an excuse for failing to act in the interest of shareholder value creation. Trends in Magellan's business are improving and given the hurdle rate in the market, the cash should be returned to shareholders, as opposed to making "wise" strategic decisions that may or may not create future returns. As evidenced by the market's negative reaction to Inverness Medical Innovations' (IMA) offer for Matria Healthcare, "empire building" acquisitions outside of a company's core competency are not being viewed favorably by investors. Instead, we believe investors value steady visible cash flow, focused value creation and the return of cash. We urge the Company to initiate an immediate program to return cash to the owners. Importantly, this would improve Magellan's ROE and tangibly demonstrate to the Street the Company's commitment to maximizing shareholder value. It would also show the market that management believes in its own future. Now that Steve Shulman is no longer CEO, we are hopeful that this change will end the resistance to returning cash to shareholders. For nearly two years we have listened to nothing but lip service and the potential of a ridiculously wide berth of merger candidates. We appreciate your discretion in avoiding the numerous deals we are sure you were presented and you need to look no further than IMA to see how the market punishes "empire building" managers. We note that management and insiders own only ~1.5% of the company's outstanding shares and truly hope that this does not cause a reason for management and shareholder interests to diverge. We now expect that the Board will focus on our recommendations and act promptly and independently of the historical obstructions created by Mr. Shulman. Given our extensive research of healthcare service companies and Magellan's steady, visible, and most importantly, accelerating cash flows, we believe the best use of the owner's cash is for it to be returned to the owners. More specifically, we do not believe the managers will be rewarded for running a bigger business but rather for thinking like owners to create shareholder value and increase the Company's return on equity. We welcome the opportunity to discuss these strategies with you but believe the time to act is now. Thank you for your attention in this important matter. Regards, HealthCor Management, L.P. By: HealthCor Associates, LLC, its general partner By: /s/ Joseph P. Healey /s/ Arthur B. Cohen - ------------------------------ --------------------------------- Joseph P. Healey Arthur B. Cohen Co-Chief Executive Officer Co-Chief Executive Officer Portfolio Manager Portfolio Manager -----END PRIVACY-ENHANCED MESSAGE-----