- Revenue of $192 million, a record second quarter - Diluted
earnings per share increased 48% to $0.40 - Cash from operations
totaled $11.3 million for the quarter TUCSON, Ariz., Aug. 10
/PRNewswire-FirstCall/ -- The Providence Service Corporation
(NASDAQ:PRSC) today announced record second quarter revenue and
earnings per share for the period ended June 30, 2009. For the
second quarter of 2009, the Company reported revenue of $191.8
million, an increase of 11% from $173.0 million for the comparable
period in 2008. Revenue from Providence's social services segment
grew 12% to $87.7 million in the second quarter from the prior year
period and revenue from its non-emergency transportation (NET)
services segment grew 10% to $104.1 million in the second quarter
from the prior year period. Operating income grew 38% to $14.0
million in the second quarter as compared to $10.1 million recorded
in the year ago quarter. Net income increased 53% to $5.3 million,
or $0.40 per diluted share, in the quarter ended June 30, 2009, a
record for the Company's second quarter. Included in the 2009
quarter was $447,000 in costs associated with its proxy contest. In
the year ago quarter, net income was $3.4 million, or $0.27 per
diluted share. Providence's direct client census was approximately
56,000 at June 30, 2009, up from approximately 52,000 at June 30,
2008, and the Company had an estimated 6.7 million individuals
eligible to receive services under its NET contracts at June 30,
2009. The Company had 625 direct contracts at June 30, 2009 up from
604 at June 30, 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% to $54.4
million for the quarter ended June 30, 2009 from $62.8 million for
the prior year period. The decrease in managed entity revenue from
period to period was primarily attributable to the effect of the
Company's renegotiation of the terms of various contracts with
managed entities and 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 decreased to
approximately 23,000 at June 30, 2009 as compared to approximately
26,000 at June 30, 2008 and contracts of managed entities decreased
from 344 to 300 year over year. For the first six months of 2009,
revenue increased 9% to $378.5 million from $346.7 million for the
year ago period. Revenue from Providence's social services segment
grew 11% to $172.9 million in the first six months of 2009 from the
prior year period and revenue from its NET services segment grew 8%
to $205.6 million in the first six months of 2009 from the prior
year period. Operating income increased 38% to $29.0 million for
the first six months of 2009 compared to $21.1 million in the first
six months of 2008. Net income was $11.1 million, or $0.84 per
diluted share, for the six month period ended June 30, 2009
compared to net income of $7.1 million, or $0.56 per diluted share,
for the six months ended June 30, 2008. Included in the first six
months of 2009 was $1.0 million in costs associated with the
Company's proxy contest. Managed entity revenue was $107.8 million
and $124.2 million in the first six months of 2009 and 2008,
respectively. "Aggressive cost control along with improved census
related to an upturn in Medicaid enrollment has led to another
solid quarter for the Company," said Fletcher McCusker, Chairman
and CEO. "In the most recent contract cycle thus far, we have
achieved 100% contract renewals and although we do not currently
anticipate any benefit from healthcare reform in calendar 2009, the
payer environment continues to stabilize. This has led to the year
over year improvements in both our social services and NET segments
and solid cash flow generation, including approximately $11.3
million in the second quarter alone. As our financial condition
continues to strengthen, we plan to look at options to reduce debt
and improve the Company's capitalization." Guidance While
visibility in 2009 continues to improve, pending the completion of
state budgets, the Company will refrain from providing additional
guidance for 2009. Conference Call Providence will hold a
conference call to discuss its results on Tuesday, August 11, 2009
at 11:00 a.m. EDT (9:00 a.m. MDT, 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) 680-0865, or for international callers (617) 213-4853 and by
using the passcode 33388849. Participants may pre-register for the
call at
https://www.theconferencingservice.com/prereg/key.process?key=PTW8AV98A.
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 August 18, 2009 by dialing
(888) 286-8010 or (617) 801-6888, and using passcode 90155340.
About Providence The 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 78,000
clients through 925 contracts at June 30, 2009, with an estimated
6.7 million individuals eligible to receive the Company's
non-emergency transportation services. Combined, the Company has a
nearly $1 billion book of business including managed entities.
Forward-Looking Statements This press release contains
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as "believe,"
"demonstrate," "expect," "estimate," "anticipate," "should" and
"likely" and similar expressions identify forward-looking
statements. In addition, statements that are not historical should
also be considered 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.
Such forward-looking statements are based on current expectations
that involve a number of known and unknown risks, uncertainties and
other factors which may cause actual events to be materially
different from those expressed or implied by such forward-looking
statements. These factors include, but are not limited to the
global credit crisis, capital market conditions, and other risks
detailed in Providence's filings with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for the fiscal
year ended December 31, 2008. Providence is under no obligation to
(and expressly disclaims any such obligation to) update any of the
information in this press release if any forward-looking statement
later turns out to be inaccurate whether as a result of new
information, future events or otherwise. --financial tables to
follow-- The Providence Service Corporation Consolidated Statements
of Income (in thousands except share and per share data)
(UNAUDITED) Three months ended Six months ended June 30, June 30,
----------------------- ---------------------- 2009 2008 2009 2008
---------- ---------- ---------- ---------- Revenues: Home and
community based services $74,501 $65,385 $147,192 $131,281 Foster
care services 9,446 7,566 18,394 14,518 Management fees 3,736 5,425
7,328 10,668 Non-emergency transportation services 104,149 94,649
205,630 190,223 ---------- ---------- ---------- ---------- 191,832
173,025 378,544 346,690 Operating expenses: Client service expense
69,482 62,172 136,356 123,656 Cost of non-emergency transportation
services 95,223 87,459 185,044 173,706 General and administrative
expense 10,056 10,100 21,947 21,766 Depreciation and amortization
3,097 3,166 6,181 6,486 ---------- ---------- ---------- ----------
Total operating expenses 177,858 162,897 349,528 325,614 ----------
---------- ---------- ---------- Operating income 13,974 10,128
29,016 21,076 Other (income) expense: Interest expense 5,398 4,709
10,712 9,995 Interest income (62) (241) (178) (599) Income before
income taxes 8,638 5,660 18,482 11,680 Provision for income taxes
3,388 2,222 7,355 4,538 ---------- ---------- ---------- ----------
Net income $5,250 $3,438 $11,127 $7,142 ========== ==========
========== ========== Earnings per share: Basic $0.40 $0.27 $0.85
$0.57 Diluted $0.40 $0.27 $0.84 $0.56 Weighted-average number of
common shares outstanding: Basic 13,120,345 12,519,527 13,117,697
12,484,331 Diluted 13,207,330 12,693,880 13,189,950 12,677,379 The
Providence Service Corporation Consolidated Balance Sheets (in
thousands except share and per share data) June 30, December 31,
2009 2008 -------- -------- Assets (Unaudited) (Audited) Current
assets: Cash and cash equivalents $38,695 $29,364 Accounts
receivable-billed, net of allowance of $4.2 million in 2009 and
$3.4 million in 2008 79,350 72,617 Accounts receivable - unbilled
434 424 Management fee receivable 7,348 7,703 Other receivables
4,983 3,149 Notes receivable 125 468 Restricted cash 6,990 7,804
Prepaid expenses and other 16,054 15,378 Deferred tax assets 3,909
4,757 -------- -------- Total current assets 157,888 141,664
Property and equipment, net 11,657 11,983 Notes receivable, less
current portion - 132 Goodwill 113,231 112,770 Intangible assets,
net 77,904 81,556 Restricted cash, less current portion 5,941 5,207
Other assets 11,788 12,351 -------- -------- Total assets $378,409
$365,663 ======== ======== Liabilities and stockholders' equity
Current liabilities: Current portion of long-term obligations
17,891 $14,265 Accounts payable 4,068 3,005 Accrued expenses 30,477
27,233 Accrued transportation costs 31,412 32,051 Deferred revenue
5,125 3,375 Current portion of interest rate swap 1,278 1,431
Reinsurance liability reserve 10,015 8,847 -------- -------- Total
current liabilities 100,266 90,207 Long-term obligations, less
current portion 212,725 223,494 Other long-term liabilities 4,296
3,975 Deferred tax liabilities 10,980 10,096 -------- --------
Total liabilities 328,267 327,772 Commitments and contingencies
Stockholders' equity: Common stock: Authorized 40,000,000 shares;
$0.001 par value; 13,483,859 and 13,462,356 issued and outstanding
(including treasury shares) 13 13 Additional paid-in capital
170,119 169,699 Retained deficit (112,127) (123,254) Accumulated
other comprehensive loss, net of tax (3,440) (4,449) Treasury
stock, at cost, 619,768 shares (11,384) (11,384) -------- --------
Total Providence stockholders' equity 43,181 30,625 Non-controlling
interest 6,961 7,266 -------- -------- Total stockholders' equity
50,142 37,891 -------- -------- Total liabilities and stockholders'
equity $378,409 $365,663 ======== ======== The Providence Service
Corporation Consolidated Statements of Cash Flows (in thousands)
(UNAUDITED) Six months ended June 30, ---------------------- 2009
2008 ------- ------- Operating activities Net income $11,127 $7,142
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation 2,327 2,313 Amortization 3,854
4,173 Amortization of deferred financing costs 1,688 1,201
Provision for doubtful accounts 1,630 994 Deferred income taxes
1,526 (484) Stock based compensation 62 1,163 Excess tax benefit
upon exercise of stock options (36) (185) Other 270 22 Changes in
operating assets and liabilities, net of effects of acquisitions:
Billed and unbilled accounts receivable (7,268) (2,283) Management
fee receivable 355 (792) Other receivables (2,320) (1,346)
Restricted cash 122 457 Reinsurance liability reserve 1,490 2,094
Prepaid expenses and other 1,840 (5,300) Accounts payable and
accrued expenses 1,224 3,667 Accrued transportation costs (639)
(798) Deferred revenue 1,741 (522) Other long-term liabilities 81
51 ------- ------- Net cash provided by operating activities 19,074
11,567 Investing activities Purchase of property and equipment, net
(1,957) (2,075) Acquisition of businesses, net of cash acquired
(277) (537) Acquisition earn out payments - (6,671) Restricted cash
for contract performance (41) 2,536 Purchase of short-term
investments, net (122) (45) Collection of notes receivable 474
2,873 ------- ------- Net cash used in investing activities (1,923)
(3,919) Financing activities Repurchase of common stock, for
treasury - (55) Proceeds from common stock issued pursuant to stock
option exercise 16 469 Excess tax benefit upon exercise of stock
options 36 185 Repayment of long-term debt (7,143) (4,325) Debt
financing costs (791) (89) Capital lease payments (51) - -------
------- Net cash used in financing activities (7,933) (3,815)
------- ------- Effect of exchange rate changes on cash 113 (141)
------- ------- Net change in cash 9,331 3,692 Cash at beginning of
period 29,364 35,379 ------- ------- Cash at end of period $38,695
$39,071 ======= ======= DATASOURCE: The Providence Service
Corporation CONTACT: Fletcher McCusker, Chairman and CEO, or Kate
Blute, Director of Investor and Public Relations, both of The
Providence Service Corporation +1-520-747-6600; or Alison Ziegler
of Cameron Associates, +1-212-554-5469, for The Providence Service
Corporation Web Site: http://www.provcorp.com/
Copyright