DST Systems posts lower profit

Profits fell 25 percent in the third quarter at DST Systems, the Kansas City-based company said Thursday. But its stock jumped 5.6 percent.

The $75.1 million, or $2.08 a share, it earned in July, August and September was down from $100 million, or $2.51 a share, it had earned a year earlier.

Included in the recent results were $22 million from sales of investments. DST said its profits, ignoring investment sales and other nonbusiness related items, were down 11.9 percent at $53.9 million in the recent quarter, compared with $61.2 million a year earlier.

Shares of DST climbed $6.29 to $118.83.

The stock’s jump likely had more to do with news from DST after markets had closed Wednesday.

DST’s Argus Health Systems said Cigna, a large client, had renewed its contract. Argus, based in Kansas City, helps administer the pharmacy claims that companies like Cigna receive from insured individuals.

“This was somewhat unexpected, as the company had previously announced on the June 2013 call that Cigna had signed an agreement with Catamaran for pharmacy benefit management services,” analyst Peter Heckmann at Avondale Partners told clients in a note.

CEO Steve Hooley said in the company’s announcement that efforts to improve profit margins in all of its businesses target higher revenues and more efficient operations.

Profits fell despite a 3.8 percent increase in revenues, which totaled $705 million in the quarter.

DST provides information processing services to financial businesses, including mutual fund companies, and a number of other processing, data management and customer communications work for its clients in investment, health care and other industries.

This story was originally published October 22, 2015 at 9:20 AM with the headline "DST Systems posts lower profit."