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Providence Service Corporation Announces 187% Revenue Increase in First Quarter of 2008

First Quarter Highlights: - Revenue of $174 million, up 187% from same quarter a year ago, including

LogistiCare; Providence base social services segment grew 29% - Net income of $3.7 million, or $.29 per diluted share, includes expense

of $1.6 million, attributable to management bonuses and $350,000 of

unanticipated audit costs, totaling $0.09 per diluted share

- Cash flow of $13.8 million after $2.2 million of debt repayment

TUCSON, Ariz., May 7 /PRNewswire-FirstCall/ -- The Providence Service Corporation (Nasdaq: PRSC) today announced results for the first quarter of 2008 ended March 31, 2008.

For the first quarter of 2008, the Company reported revenue of $173.7 million, an increase of 187% from $60.5 million for the comparable period in 2007, and above management's guidance of $170 million. Revenue from Providence's base social services segment grew 29.2% to $78.1 million in the first quarter and the acquired Non-Emergency Transportation Services segment totaled $95.6 million. Operating income was $10.9 million in the quarter, more than double the $5.3 million recorded in the year ago period. Net income was $3.7 million, or $0.29 per diluted share, in the quarter ended March 31, 2008, and included $1.6 million of management bonuses and $350,000 of additional audit costs as result of 2007 acquisition activity. In the year ago quarter, net income was $3.3 million, or $0.28 per diluted share. Providence's direct client census grew to over 55,000 at March 31, 2008 from 51,259 at March 31, 2007, and the Company had over seven million individuals eligible to receive services under its non-emergency transportation contracts. The number of direct contracts increased to 705 a 13,817 (9,767)

Cash at beginning of period 35,379 40,703

Cash at end of period $49,196 $30,936

t March 31, 2008 from 577 at March 31, 2007 mostly due to contracts acquired in connection with the Company's acquisition of LogistiCare.

Managed entity revenue, which represents revenue of the not-for-profit social services organizations the Company provides management and/or administrative services to in return for a negotiated management fee, increased 5.8% to $56.4 million for the quarter ended March 31, 2008 from $53.3 million for the prior year period. Managed entity revenue is presented to provide investors with an additional measure of the size of the operations under Providence's management or administration and can help investors understand trends in management fee revenue. Managed client census grew to over 25,000 at March 31, 2008 as compared to 24,087 at March 31, 2007. Contracts of managed entities decreased to 325 from 328 quarter over quarter due to the consolidation of certain contracts.

"This is an exciting time for us," said Fletcher McCusker, Chairman and CEO. "Increased enrollment in Medicaid and other demographic trends continue to strain state government budgets, creating a rich environment for privatization. At the end of the first quarter we won our second largest social services contract, an $18 million workforce development contract in the greater El Paso area and we continue our track record of renewals, with no indication of contract terminations for the July procurement cycle. This is despite the economic downturn and negative rhetoric regarding government budgets. We continue to believe we are part of the solution to government budget issues."

"We are also making progress integrating our recent acquisition of LogistiCare. We have co-located some of our employees and have consolidated certain IT and back office functions where appropriate. We are also beginning to see some synergies in the areas of strategic business development. As we look ahead, we continue to see over $100 million of contracts up for bid for the fiscal 2009 procurement cycle and look forward to hearing about these awards over the next two quarters."


The Company anticipates second quarter 2008 revenue of approximately $174-175 million with earnings per diluted share of between $0.36 and $0.38. At the current time the Company has no change to its prior 2008 annual guidance of $673 million in revenue and $1.45 to $1.50 in diluted earnings per share. The Company anticipates it will provide guidance for the remaining two quarters of 2008 after it has more visibility into the July procurement cycle.

Conference Call

Providence will hold a conference call at 11:00 a.m. EDT (9:00 a.m. MDT, 8:00 a.m. Arizona and PDT) on Thursday, May 8, 2008 to discuss its financial results and corporate developments. Interested parties are invited to listen to the call live over the Internet at or The call is also available by dialing (888) 679-8034, or for international callers (617) 213-4847 and by using the passcode 12295591. Participants may pre-register for the call at Pre-registrants will be issued a pin number to use when dialing into the live call which will provide quick access to the conference by bypassing the operator upon connection. A replay of the teleconference will be available on and A replay will also be available until May 15, 2008 by dialing (888) 286-8010 or (617) 801-6888, and using passcode 82974931.

About Providence

Providence Service Corporation, through its owned and managed entities, provides home and community based social services and non-emergency transportation services management to government sponsored clients under programs such as welfare, juvenile justice, Medicaid and corrections. Providence does not own or operate beds, treatment facilities, hospitals or group homes, preferring to provide services in the client's own home or other community setting. The Company provides a range of services to over 80,000 clients through approximately 1,030 contracts, with an estimated seven million individuals eligible to receive the Company's non-emergency transportation services related to its LogistiCare operations. Combined, the Company has a nearly $1 billion book of business with managed entities.

Certain statements herein, such as any statements about Providence's confidence or strategies or its expectations about revenues, results of operations, profitability, earnings per share, contracts, collections, award of contracts, acquisitions and related growth, growth resulting from initiatives in certain states, effective tax rate or market opportunities, constitute "forward-looking statements" within the meaning of the private Securities Litigation Reform Act of 1995. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause Providence's actual results or achievements to be materially different from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, reliance on government-funded contracts, risks associated with government contracting, risks involved in managing government business, legislative or policy changes, challenges resulting from growth or acquisitions, adverse media and legal, economic and other risks detailed in Providence's filings with the Securities and Exchange Commission, including its Form 10-K for the year ended December 31, 2007. Words such as "believe," "demonstrate," "expect," "estimate," "anticipate," "should" and "likely" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of the date the statement was made. Providence undertakes no obligation to update any forward-looking statement contained herein.

--financial tables to follow--

The Providence Service Corporation

Consolidated Statements of Income

(in thousands except share and per share data)


Three months ended

March 31,

2008 2007


Home and community based services $65,896 $50,030

Foster care services 6,952 5,641

Management fees 5,242 4,784

Non-emergency transportation services 95,574 -

173,664 60,455

Operating expenses:

Client service expense 61,483 46,803

Cost of non-emergency transportation services 86,248 -

General and administrative expense 11,666 7,318

Depreciation and amortization 3,320 1,008

Total operating expenses 162,717 55,129

Operating income 10,947 5,326

Other (income) expense:

Interest expense 5,285 111

Interest income (358) (363)

Income before income taxes 6,020 5,578

Provision for income taxes 2,316 2,259

Net income $3,704 $3,319

Earnings (loss) per common share:

Basic $0.30 $0.28

Diluted $0.29 $0.28

Weighted-average number of common shares


Basic 12,240,299 11,852,759

Diluted 12,452,041 11,983,421

The Providence Service Corporation

Consolidated Balance Sheets

(in thousands except share and per share data)

March 31, December 31,

2008 2007

Assets (Unaudited) (Audited)

Current assets:

Cash and cash equivalents $49,196 $35,379

Accounts receivable-billed, net of allowance

of $2.6 million 68,034 65,852

Accounts receivable - unbilled 2,149 2,250

Management fee receivable 10,460 10,166

Other receivables 1,706 2,524

Notes receivable 567 563

Notes receivable from related party 44 1,734

Restricted cash 7,071 8,842

Prepaid expenses and other 8,732 9,554

Deferred tax assets 3,247 5,094

Total current assets 151,206 141,958

Property and equipment, net 11,265 11,562

Notes receivable, less current portion 749 880

Goodwill 280,805 280,710

Intangible assets, net 95,836 98,254

Restricted cash, less current portion 5,031 6,461

Other assets 12,563 12,158

Total assets $557,455 $551,983

Liabilities and stockholders' equity

Current liabilities:

Current portion of long-term obligations $10,031 $8,950

Accounts payable 12,826 14,035

Accrued expenses 40,536 36,448

Accrued transportation costs 25,344 24,576

Deferred revenue 3,223 4,062

Reinsurance liability reserve 6,343 8,344

Total current liabilities 98,303 96,415

Long-term obligations, less current portion 233,225 236,469

Other long-term liabilities 4,221 190

Deferred tax liabilities 29,766 30,600

Total liabilities 365,515 363,674

Non-controlling interest 7,649 7,649

Commitments and contingencies

Stockholders' equity:

Common stock: Authorized 40,000,000 shares;

$0.001 par value; 12,776,933 and 12,756,392

issued and outstanding (including treasury

shares) 13 13

Additional paid-in capital 159,860 159,177

Common stock subscription receivable - (715)

Retained earnings 36,055 32,351

Accumulated other comprehensive (loss)

income, net of tax (378) 1,093

195,550 191,919

Less 612,026 treasury shares, at cost 11,259 11,259

Total stockholders' equity 184,291 180,660

Total liabilities and stockholders' equity $557,455 $551,983

The Providence Service Corporation

Consolidated Statements of Cash Flows

(in thousands)


Three months ended

March 31,

2008 2007

Operating activities

Net income $3,704 $3,319

Adjustments to reconcile net income to net cash

provided by operating activities:

Depreciation 1,241 300

Amortization 2,079 709

Amortization of deferred financing costs 620 47

Deferred income taxes (231) (186)

Stock based compensation 554 453

Excess tax benefit upon exercise of stock options (27) -

Other 19 -

Changes in operating assets and liabilities,

net of effects of acquisitions:

Billed and unbilled accounts receivable, net (2,285) (3,609)

Management fee receivable (295) (677)

Other receivable 882 (715)

Restricted cash 559 -

Reinsurance liability reserve (46) (588)

Prepaid expenses and other 749 512

Accounts payable and accrued expenses 4,760 1,491

Accrued transportation costs 768 -

Deferred revenue (838) 18

Other long-term liabilities 29 -

Net cash provided by operating activities 12,242 1,074

Investing activities

Purchase of property and equipment, net (1,017) (289)

Acquisition of businesses, net of cash acquired (346) (607)

Restricted cash for contract performance 2,643 567

Sale / (purchase) of short-term investments, net 26 (76)

Collection of notes receivable 2,531 30

Net cash provided by (used in) investing activities 3,837 (375)

Financing activities

Repurchase of common stock, for treasury - (10,376)

Proceeds from common stock issued pursuant to

stock option exercise 101 26

Excess tax benefit upon exercise of stock options 27 -

Repayment of long-term debt (2,162) (116)

Debt financing costs (33) -

Net cash used in financing activities (2,067) (10,466)

Effect of exchange rate changes on cash (195) -

Net change in cash

SOURCE The Providence Service Corporation
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All rights reserved

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