Providence Service Corporation Reports Q1 2011 Results in Line With Expectations

TUCSON, Ariz., May 4, 2011 /PRNewswire/ -- The Providence Service Corporation (Nasdaq: PRSC) today announced its financial results for the first quarter ended March 31, 2011.  

For the first quarter of 2011, the Company reported revenue of $227.8 million, an increase of 3.1% from $221.0 million for the comparable period in 2010.  Revenue from Providence's non-emergency transportation (NET) services segment grew 4.9% to $139.0 million in the first quarter from the prior year period.  Revenue from the social services segment was $88.8 million, up from $88.5 million in the first quarter of 2010.

Net income was $4.5 million, or $0.34 per diluted share, in the first quarter of 2011.  This included a non-cash charge of approximately $2.5 million, or $0.11 per share, related to the write-off of unamortized deferred financing fees.  This compares to net income of $9.1 million, or $0.66 per diluted share, in the first quarter of 2010.  Increased utilization in NJ related to our geographic expansion there led to the higher NET service expenses in the quarter.  

Providence's direct client census was approximately 59,800 at March 31, 2011, compared to approximately 58,100 at December 31, 2010 and 62,200 at March 31, 2010.  While the census was up from fourth quarter levels, year over year census was negatively impacted by a decline in correctional services and workforce development clients.  The Company had approximately 9.6 million individuals eligible to receive services under its NET contracts at March 31, 2011 compared to 8.2 million at December 31, 2010 and 7.9 million at March 31, 2010.  Direct contracts numbered 725 at March 31, 2011 down from 752 at March 31, 2010 primarily due to certain contract consolidations.  

At March 31, 2011, the Company had unrestricted cash and cash equivalents of $57.6 million.  During the first quarter of 2011, the Company generated a total of $12.7 million in cash from operations and refinanced its then existing senior debt facility and paid all amounts due under this debt facility with cash in the amount of $12.3 million and proceeds from its new senior debt facility.  The Company currently has long term liabilities of $174.7 million, down from $194.8 million at March 31, 2010.

"Our first quarter results were in line with previously issued guidance," stated Fletcher McCusker, Chairman and CEO.  "The Social Services segment performed ahead of budget due to increased market demand for less expensive home and community based delivery services while our NET segment was below budget due to the expansion of our successful program in the State of New Jersey into several new rural counties.  This expansion has created a short term, unanticipated decrease in margin due to higher utilization in the new counties relative to the already established per member per month reimbursement.  Effective July 1, 2011, our rates will be adjusted to account for the higher expense in New Jersey, improving the situation in the second half of the year."

Mr. McCusker added, "While state budget pressures and system reforms have the potential to challenge our overall profit margins, they also favor our home and community based model.  We believe we are well positioned to be part of the solution in these challenging times and believe our business model will allow us to remain flexible and make adjustments to help mitigate any pressures that arise."

Guidance  

As previously announced, revenue for the second quarter of 2011 is anticipated to be in a range of $225 to $235 million compared to revenue of $222 million in the year ago period.  We believe the margin pressure in New Jersey will lead to a shortfall in our second quarter budget by approximately $0.05 per share.  As a result, we now anticipate diluted earnings per share to be approximately $0.35, down from prior expectations of $0.40 to $0.42.  Diluted earnings per share was $0.54 in the second quarter of 2010.  

Providence anticipates providing guidance for the full year 2011 in late Q2 or early Q3, subsequent to the completion of the Company's Social Services segment contract renewal cycle.  In addition, the Company anticipates its tax rate to be approximately 42.5%.

Conference Call

Providence will hold a conference call at 11:00 a.m. EDT (9:00 a.m. MDT and 8:00 a.m. Arizona and PDT) Thursday, May 5, 2011, to discuss its financial results and corporate developments.  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) 679-8018 or for international callers (617) 213-4845 and by using the passcode 91849968.  Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PX8XUU8U6.  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 12, 2011 by dialing (888) 286-8010 or (617) 801-6888, and using passcode 68227993.

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 social services in the client's own home or other community setting.  It provides its non-emergency transportation services management through local transportation providers rather than owning its own fleet of vehicles.  The Company provides a range of services through its direct entities to approximately 59,800 clients through 725 active contracts at March 31, 2011, with an estimated 9.6 million individuals eligible to receive the Company's non-emergency transportation services.  Combined, the Company has an approximately $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, the implementation of the healthcare reform law, state budget changes and legislation 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, 2010. 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.

SOURCE The Providence Service Corporation