First Quarter Highlights:
- Revenue gained 7.5% to $187 million compared to Q1 2008
- Net income increased 58.7% compared to Q1 2008, rising to $5.9 million, or $0.44 per diluted share
- Increases in client census and rate combined with increased efficiencies in operations contributed to record earnings
- Cash from operations totaled $7.8 million
- Sale of NET Services operations suspended by Providence
TUCSON, Ariz., May 6 /PRNewswire-FirstCall/ -- The Providence Service Corporation (Nasdaq: PRSC) today announced results for the first quarter of 2009 ended March 31, 2009.
For the first quarter of 2009, the Company reported revenue of $186.7 million, an increase of approximately 7.5% from $173.7 million for the comparable period in 2008. Revenue from Providence's social services segment grew 9.1% to $85.2 million in the first quarter compared to $78.1 million in the prior year period while revenue from its non-emergency transportation (NET) services business totaled $101.5 million in the first quarter of 2009, an increase of 6.2% from $95.6 million in the first quarter of 2008.
Operating income increased 37.4% to $15.0 million in the first quarter of 2009 compared to $10.9 million recorded in the year ago period. Net income gained 58.7% to $5.9 million, or $0.44 per diluted share, in the quarter ended March 31, 2009, and included approximately $2.1 million in costs and expenses related to the amended credit agreement, the now abandoned consent solicitation and costs related to the potential sale of non-strategic assets. In the year ago quarter, net income was $3.7 million, or $0.29 per diluted share.
Providence's direct client census was approximately 60,000 at March 31, 2009, up from over 55,000 at March 31, 2008, and the Company had over six million individuals eligible to receive services under its NET contracts at March 31, 2009. The Company had 726 direct contracts at March 31, 2009 up from 705 at March 31, 2008.
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, decreased 13.2% to $53.4 million for the quarter ended March 31, 2009 from $61.5 million for the prior year period. The decrease in managed entity revenue from period to period was primarily attributable to the Company's September 2008 acquisition and consolidation of substantially all of the assets in Illinois and Indiana of Camelot Community Care, Inc., a managed entity. 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 was approximately 22,000 at March 31, 2009 as compared to approximately 25,000 at March 31, 2008. Contracts of managed entities decreased to 293 from 325 year over year.
"Given the difficult business conditions we experienced in the back half of 2008, we are particularly pleased to see such across the board improvements in the first quarter both from the traction from operating efficiencies realized as well as external improvements in the payer sector," said Fletcher McCusker, Chairman and CEO. "Our rates have improved, referral impediments have eased, our census is up, our operational improvements, including cost cutting measures, initiated last year in our most challenging markets have proven successful and most of the expense reductions we announced expecting continued pressure on revenue have been implemented. The social services segment contributed $0.37 per diluted share while the NET segment contributed $0.07 to diluted earnings per share. The diluted earnings per share for the NET segment include a corporate overhead allocation, all interest related to senior debt, and approximately $1.6 million comprised of the amended credit agreement fees and expense and costs related to the sale of non-strategic assets."
"We saw our payer environment begin to stabilize in our social services markets in the first quarter of 2009. We attribute much of this to the favorable psychology associated with the passage of the Children's Health Insurance Program Reauthorization Act (signed into law in February 2009), the American Recovery and Reinvestment Act of 2009, and a Federal court decision that permanently enjoined the State of California from making any Medicaid cuts. For the first time since July 2008, we believe that state governments are now operating under the assumption that there will be additional federal assistance to help manage the services afforded our indigent populations. With respect to our NET Services operating segment, we saw some rates improve along with lower utilization, which resulted in improved operating margin for the first quarter of 2009. Given the current favorable Medicaid outlook, anticipated new funding availability for our payers and the improvement in performance in both segments of our operations, we have suspended efforts to sell our NET services operations in favor of growing both segments of our business and keeping them working together on behalf of our state payers to maximize value for our stockholders."
"There was clearly pent up demand that resulted from the rationing of care that occurred in the back half of 2008 and we remain cautious regarding the remainder of 2009. A number of states still face record deficits and fiscal 2010 state budgets will not be set until around June 2009. While we are not ready to issue guidance based upon our first quarter results, we believe there is more rational behavior and budget planning returning to the system of care."
"Our staff's commitment to the quality of our services and outcomes of our programs is very impressive and we are grateful to them for their dedication."
The Company will not provide any further guidance for the year at this time.
Providence will hold a conference call to discuss its results and corporate developments on Thursday, May 7, 2009 at 11:00 a.m. EDT (9:00 a.m. MDT and 8:00 a.m. Arizona and PDT). Interested parties are invited to listen to the call live over the Internet at http://investor.provcorp.com or http://www.earnings.com. The call is also available by dialing (888) 679-8040, or for international callers (617) 213-4851 and by using the passcode 38247809. Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=P89BVTETL. 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 http://investor.provcorp.com and http://www.earnings.com. A replay will also be available until May 14, 2009 by dialing (888) 286-8010 or (617) 801-6888, and using passcode 62359874.
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 through its direct and managed entities to over 81,000 clients through 1,019 contracts at March 31, 2009, with an estimated 6.7 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 including 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 latest Form 10-K. 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) (UNAUDITED) Three months ended March 31, 2009 2008 Revenues: Home and community based services $72,691 $65,896 Foster care services 8,948 6,952 Management fees 3,592 5,242 Non-emergency transportation services 101,481 95,574 186,712 173,664 Operating expenses: Client service expense 66,874 61,483 Cost of non-emergency transportation services 89,822 86,248 General and administrative expense 11,891 11,666 Depreciation and amortization 3,084 3,320 Total operating expenses 171,671 162,717 Operating income 15,041 10,947 Other (income) expense: Interest expense 5,314 5,285 Interest income (116) (358) Income before income taxes 9,843 6,020 Provision for income taxes 3,966 2,316 Net income $5,877 $3,704 Earnings per share: Basic $0.45 $0.30 Diluted $0.44 $0.29 Weighted-average number of common Shares outstanding: Basic 13,115,018 12,527,875 Diluted 14,851,279 12,739,617
The Providence Service Corporation Consolidated Balance Sheets (in thousands except share and per share data) March 31, December 31, 2009 2008 Assets (Unaudited) (Audited) Current assets: Cash and cash equivalents $32,149 $29,364 Accounts receivable-billed, net of allowance of $5.3 million in 2009 and $3.4 million in 2008 81,879 72,617 Accounts receivable -unbilled 514 424 Management fee receivable 7,644 7,703 Other receivables 3,322 3,149 Notes receivable 395 468 Restricted cash 7,877 7,804 Prepaid expenses and other 11,941 15,378 Deferred tax assets 4,803 4,757 Total current assets 150,524 141,664 Property and equipment, net 11,464 11,983 Notes receivable, less current portion 98 132 Goodwill 113,050 112,770 Intangible assets, net 79,553 81,556 Restricted cash, less current portion 5,210 5,207 Other assets 12,198 12,351 Total assets $372,097 $365,663 Liabilities and stockholders' equity Current liabilities: Current portion of long-term obligations $15,021 $14,265 Accounts payable 3,776 3,005 Accrued expenses 29,477 27,233 Accrued transportation costs 31,357 32,051 Deferred revenue 4,695 3,375 Current portion of interest rate swap 1,403 1,431 Reinsurance liability reserve 8,301 8,847 Total current liabilities 94,030 90,207 Long-term obligations, less current portion 219,169 223,494 Other long-term liabilities 4,029 3,975 Deferred tax liabilities 11,056 10,096 Total liabilities 328,284 327,772 Commitments and contingencies Stockholders' equity: Common stock: Authorized 40,000,000 shares; $0.001 par value; 13,473,859 and 13,462,356 issued and outstanding (including treasury shares) 13 13 Additional paid-in capital 170,005 169,699 Retained deficit (117,377) (123,254) Accumulated other comprehensive loss, net of tax (4,405) (4,449) Treasury stock, at cost, 619,768 shares (11,384) (11,384) Total Providence stockholder's equity 36,852 30,625 Non-controlling interest 6,961 7,266 Total stockholder's equity 43,813 37,891 Total liabilities and stockholder's equity $372,097 $365,663
The Providence Service Corporation Consolidated Statements of Cash Flows (in thousands) (UNAUDITED) Three months ended March 31, 2009 2008 Operating activities Net income $5,877 $3,704 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,160 1,241 Amortization 1,925 2,079 Amortization of deferred financing costs 998 620 Provision for doubtful accounts 487 614 Deferred income taxes 828 (231) Stock based compensation 1 554 Excess tax benefit upon exercise of stock options - (27) Other 147 19 Changes in operating assets and liabilities, net of effects of acquisitions: Billed and unbilled accounts receivable (9,958) (2,899) Management fee receivable 59 (295) Other receivable (179) 882 Restricted cash (127) 559 Reinsurance liability reserve (347) (46) Prepaid expenses and other 3,385 749 Accounts payable and accrued expenses 2,868 4,760 Accrued transportation costs (694) 768 Deferred revenue 1,313 (838) Other long-term liabilities 23 29 Net cash provided by operating activities 7,766 12,242 Investing activities Purchase of property and equipment, net (667) (1,017) Acquisition of businesses, net of cash acquired (4) (346) Restricted cash for contract performance 51 2,643 Purchase of short-term investments, net (65) 26 Collection of notes receivable 107 2,531 Net cash provided by (used in) investing activities (578) 3,837 Financing activities Proceeds from common stock issued pursuant to stock option exercise - 101 Excess tax benefit upon exercise of stock options - 27 Repayment of long-term debt (3,569) (2,162) Debt financing costs (769) (33) Capital lease payments (34) - Net cash used in financing activities (4,372) (2,067) Effect of exchange rate changes on cash (31) (195) Net change in cash 2,785 13,817 Cash at beginning of period 29,364 35,379 Cash at end of period $32,149 $49,196
|SOURCE Providence Service Corporation|
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