Health care outsourcing company Magellan Health Services Inc. said Friday that its profit fell 3 percent in the second quarter on a drop in revenue.

The company said its profit declined to $34.2 million from $35.1 million. Magellan had fewer shares on the market during the second quarter of 2011 than it did a year ago because of stock repurchases, so its per-share profit grew to $1.07, from $1.05, a year earlier. Its revenue fell 6 percent, to $698.3 million from $741.7 million.

Analysts expected a profit of 86 cents per share and $703.7 million in revenue, according to a FactSet survey.

Magellan had an average of 31.9 million shares on the market during the latest quarter, down from 33.8 million in the second quarter of 2010.

Magellan's revenue also fell 5 percent in the first quarter, but its profit grew in that period because it was able to cut costs.

Because of its share repurchases, Magellan said it now expects a profit of $3.30 to $3.83 per share this year, up from a previous forecast of $3.24 to $3.76 per share. Analysts are expecting $3.63 per share on average.

Shares of Magellan Health Services slipped 75 cents, or more than 1 percent, to $52.84 in afternoon trading.