October 30, 2009 / 1:22 PM / 10 years ago

UPDATE 2-Magellan Q3 profit beats Street, raises FY EPS view

* Q3 EPS $0.88 vs est $0.64

* Q3 rev $667.6 mln vs yr-ago $656.5 mln

* Says expands contract with WellCare

* Shares rise 8 pct (Recasts; adds details, analyst comment, updates share movement)

Oct 30 (Reuters) - Magellan Health Services Inc (MGLN.O) posted a better-than-expected quarterly profit, partly helped by effective cost-of-care management, and raised its full-year earnings outlook, sending its shares up 8 percent.

Magellan, which provides a network of doctors and hospitals to its members, said it signed a deal with WellCare Health Plans Inc (WCG.N) to manage behavioral health services for all WellCare markets, and expects the deal to add an incremental annual revenue of $60 million.

“This is the first time in at least a half a decade that Magellan has added a sizeable behavioral health contract,” Oppenheimer analyst Carl McDonald said in a note.

The three-year contract expands upon the company’s current agreement with WellCare in the state of Georgia.

The company reported third-quarter net income of $31.0 million, or 88 cents a share, compared with $23.5 million, or 58 cents a share, a year ago.

Revenue rose to $667.6 million from $656.5 million last year.

Analysts on average expected earnings of 64 cents a share, excluding special items, on revenue of $672.8 million, according to Thomson Reuters I/B/E/S.

For the full year, the company now expects earnings in the range of $2.41 a share to $2.70 a share. It had earlier forecast full-year earnings of $2.04 a share to $2.59 a share.

Shares of the company were up 8 percent at $32.67 in morning trade on Nasdaq. They touched a high of $32.89 earlier in the session.

For the alerts, double-click [ID:nWNAB7407] (Reporting by Shailesh Kuber in Bangalore; Editing by Maju Samuel, Anne Pallivathuckal)

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