Australia-based medical centre operator and pathology provider Primary Health Care (ASX:PRY) has announced a 21.7 per cent increase in net profit but expects earnings in the current year to be at the lower end of earlier guidance.

The company posted net profit of $132 million in 2009-10, up from $108.50 million in the previous year. It declared a final dividend of 10 cents a share, fully franked, bringing the full-year dividend to 25 cents, up from 14 cents the previous year.

Demand had been subdued in the final two months of 2009-10, according to Primary. It expects earnings in 2010-11 to be around $360 million, at the bottom of a range of earlier guidance of $360-380 million.

Revenue for the year totalled $1.29 billion, down on last year's $1.33 billion figure.

Earnings before interest, tax, depreciation and amortisation (EBITDA) declined from last year's $355 million to $331 million.

Primary said funding cuts from the federal government for Medicare services outside hospitals in 2009 of $11.10 per head had affected its result.

''The latter funding cuts include non-renewal of some practice incentive programs, item numbers associated with joint injections, together with pathology and other cuts,'' the company said.

''The costs of medical practice service provision continue to increase (rents, rates, electricity, wages).

''Primary, in order to maintain affordability for patients, continues to bulk bill more than 90 per cent of its ten million GP services provided each year.''

The cuts had made it harder for patients to afford GP visits, the company said.

''While this will lead to reduced access to those not able to afford care, the demand by those who can pay will lead to renewed growth.''

''The timing of this is hard to determine.

''Notwithstanding this, the underlying drivers of healthcare demand will provide underlying long term volume growth in each of Primary's divisions,'' it said.