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Magellan Health Services ( MGLN) reported on February 27, 2009 that its Q4 FY08 net earnings dropped 24.7% on higher care costs and loss of certain contracts. Net income for the quarter decreased to $23.58 million, or $0.61 per share, from $31.30 million, or $0.78 per share. Segmental profit was $55.05 million as compared to $66.23 million in Q4 FY07. The quarterly earnings beat the consensus estimate of $0.55 per share.

During Q4 FY08, revenue inched up to $661.78 million from $658.01 million, helped by strong growth across its business segments. Commercial sales fell 16.2% year-over-year to $162.84 million from $194.27 million. Public sector revenue rose 6.4% to $367.12 million from $345.14 million. Radiology benefits management sales inched up to $71.45 million from $69.00 million a year ago. Additionally, specialty pharmaceutical management revenue swelled 21.7% to $60.38 million from $49.60 million in the prior year's quarter. Total cost of care increased 2.2% to $461.79 million, while direct service costs dipped 1.0% to $104.52 million. Meanwhile, stock compensation expense narrowed to $6.41 million from $7.33 million a year ago.

During the fourth quarter, MGLN repurchased 4.30 million shares for a total of $151.60 million, completing approximately 76.0% of the approved $200.00 million program authorized by the board.

For FY08, net income fell 8.4% to $86.21 million, or $2.16 per share, from $94.16 million, or $2.36 per share, in FY07. Annual revenue surged 21.8% to $2.63 billion from $2.16 billion.

Looking ahead to the full year 2009, Magellan Health Services reaffirmed its earnings guidance in the range of $73.40 to $93.70 million on revenue of $2.50 to $2.60 billion. In addition, the company expects segment profit in the range of $190.00 to $210.00 million.

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