Distressed Debt Analysis - Moyer
I am reading Distressed Debt Analysis by Stephen Moyer and was confused about this sentence.
On the cost side, the economic recession, higher unemploy-
ment rates, and the aftermath of the September 11 tragedy resulted in higher
utilization of behavioral health services, reducing Magellan ’s margins.
Why would higher utilization of a company's service increase cost and thereby reduce the company's margins? Wouldn't more utilization lead to higher sales = higher margins?
For context, Magellan is a behavioral health managed care provider focused on ailments like depression, paranoia, substance abuse, etc.
Cheers.
Prospect in IB-M&A, sorry there are no responses yet. Maybe one of these topics can point you in the right direction:
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