H&R Block reports $85.5 million 4Q loss

H & R Block’s continuing struggles in its mortgage lending unit put a drag on fourth-quarter earnings. The Kansas City-based tax preparer said that it lost $85.5 million, or 26 cents per share, in the fourth quarter ended April 30, compared to net income of $587.5 million, or $1.77 per share in the year-ago period. Revenue in the quarter increased 8% to $2.35 billion, compared to $2.18 billion in the year-ago period. Analysts surveyed by Financial expected earnings of $1.88 on $2.44 billion in revenue. H & R Block said it recorded a quarterly loss of $676.8 million, or $2.07 per share, on discontinued operations, which includes Option One—its subprime lending business—as well as several smaller non-mortgage businesses. The company announced in April that it would sell its Option One Mortgage Corp. to a subsidiary of Cerberus Capital Management LP, a New York-based private equity company, by Oct. 31 (InvestmentNews, April 20). The tax division reported $1.91 billion in revenue, up 8.2% compared to $1.76 billion during the fourth quarter of 2006. Revenue from its consumer financial services segment, which began operations at the start of the 2007 fiscal year, increased 57% from $120.2 million compared with $76.8 million in 2006.