LOUISVILLE, Ky. (AP) — ResCare Inc., which provides residential, training and support services to people with physical and mental disabilities, said Wednesday that tight state government budgets and changes to contracts reduced its profit in 2009.
Further, the company said it could not give a forecast for 2010 because of uncertainty about Medicaid reimbursement rates, national health care reform, a legal matter in New Mexico and its new credit facility, which has not been finalized.
The news sent shares of ResCare to their lowest price in almost six years on heavy trading volume.
ResCare said state governments are cutting reimbursement rates and orders for its services. In some cases, the states are changing contract awards, preferring to give more business to in-state companies instead of out-of-state providers, according to ResCare.
The company said some agreements that were scheduled to close in late 2009 were not finished on time, but it expects those deals to close in the first quarter.
ResCare added that its business model is “strong and sustainable” but that the environment is “increasingly challenging and changing.”
ResCare now expects to earn about $1.20 per share for 2009, excluding costs from a legal case. That is down from a prior forecast of $1.30 to $1.34 per share. It pared its revenue forecast to around $1.58 billion, from a range of $1.6 billion to $1.63 billion.
Wall Street expects $1.31 per share in profit and $1.6 billion in revenue, according to a Thomson Reuters analyst survey.
The stock dropped $1.99, or 18 percent, to $9.38 in afternoon trading. Earlier it fell to $9.10, its lowest price since February 2004.