Providence Service Corporation Reports Q1 2012 Results
Highlights:
- Revenue rose 14.2% over last year's first quarter to $260.1 million
- Diluted EPS of $0.23
- Net cash provided by operations totaled $9.2 million
- Higher utilization primarily due to an unusually mild winter and start-up expenses contributed to higher NET costs
TUCSON, Ariz., May 9, 2012 /PRNewswire/ -- The Providence Service Corporation (Nasdaq: PRSC) today announced its financial results for the first quarter ended March 31, 2012.
First Quarter 2012 Results
For the first quarter of 2012, the Company reported revenue of $260.1 million, an increase of 14.2% from $227.8 million in the comparable period in 2011. Revenue from Providence's non-emergency transportation (NET) services segment grew 18.5% to $164.7 million in the first quarter from $139.0 million in the prior year period. Revenue from the social services segment increased 7.5% to $95.5 million, up from $88.8 million in the first quarter of 2011. Revenue growth benefitted from new NET contract wins and a June 2011 acquisition.
Net income was $3.0 million, or $0.23 per diluted share, in the first quarter of 2012 compared to net income of $4.5 million, or $0.34 per diluted share, in the first quarter of 2011. The current quarter included a non-recurring tax benefit of approximately $0.03 per share related to a tax accounting method change for a 2011 acquisition.
Providence's direct social service client census was approximately 61,900 at March 31, 2012 compared to 59,800 at March 31, 2011. The Company had approximately 12.4 million individuals eligible to receive services under its NET contracts at March 31, 2012 compared to approximately 9.6 million at March 31, 2011. Total direct contracts numbered 720 at March 31, 2012 compared to 725 at March 31, 2011.
At March 31, 2012, the Company had unrestricted cash and cash equivalents of $47.1 million. During Q1 2012, the Company generated a total of $9.2 million in cash from operations. At March 31, 2012, the Company had long term liabilities of $163.8 million, down from $174.7 million at March 31, 2011.
"Our first quarter results saw higher than normal expenses in the NET segment primarily due to the effect of an unusually mild winter on utilization and start-up expenses associated with launching several new contracts simultaneously," stated Fletcher McCusker, Chairman and CEO. "While start-up expenses will continue to impact the second quarter, we anticipate having all five of our new contracts up and running during the back half of the year and believe we are well positioned to grow and win new business."
Guidance
For the full year 2012, Providence continues to anticipate revenue to be approximately $1.0 billion with diluted earnings per share of approximately $1.22. While NET utilization has increased and start up costs for new NET business are significant in the first half of 2012, we expect the new business to ramp up in the second half of the year. In addition, social services revenue is slightly ahead of plan. As a result, quarterly results for the remainder of 2012 are expected to approximate the following:
|
Quarter |
Revenue |
Diluted EPS |
|
Q2 |
$275 million |
$0.17 |
|
Q3 |
$273 million |
$0.34 |
|
Q4 |
$280 million |
$0.48 |
The Company anticipates its tax rate to be 42.65% for the remaining quarters in 2012.
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 10, 2012 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 (866) 783-2140 or for international callers (857) 350-1599 and by using the passcode 38159535. 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 17, 2012 by dialing (888) 286-8010 or (617) 801-6888, and using passcode 47479804.
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 is different from many of its competitors in that it provides its social services primarily in the client's own home or in community based settings versus treatment facilities or hospitals and provides its NET management services 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 61,900 clients through 720 active contracts at March 31, 2012, with an approximate 12.4 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," "forecast," "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, 2011. 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 | ||||
|
March 31, | ||||
|
2012 |
2011 | |||
|
Revenues: |
||||
|
Home and community based services |
$ 84,125 |
$ 77,244 | ||
|
Foster care services |
8,355 |
8,251 | ||
|
Management fees |
2,995 |
3,345 | ||
|
Non-emergency transportation services |
164,672 |
138,966 | ||
|
260,147 |
227,806 | |||
|
Operating expenses: |
||||
|
Client service expense |
80,210 |
72,814 | ||
|
Cost of non-emergency transportation services |
156,979 |
126,108 | ||
|
General and administrative expense |
12,739 |
11,924 | ||
|
Depreciation and amortization |
3,626 |
3,249 | ||
|
Total operating expenses |
253,554 |
214,095 | ||
|
Operating income |
6,593 |
13,711 | ||
|
Other (income) expense: |
||||
|
Interest expense |
1,907 |
3,732 | ||
|
Loss on extinguishment of debt |
- |
2,463 | ||
|
Interest income |
(42) |
(59) | ||
|
Income before income taxes |
4,728 |
7,575 | ||
|
Provision for income taxes |
1,686 |
3,106 | ||
|
Net income |
$ 3,042 |
$ 4,469 | ||
|
Earnings per share: |
||||
|
Basic |
$ 0.23 |
$ 0.34 | ||
|
Diluted |
$ 0.23 |
$ 0.34 | ||
|
Weighted-average number of common shares |
||||
|
outstanding: |
||||
|
Basic |
13,266,908 |
13,222,566 | ||
|
Diluted |
13,404,833 |
13,320,443 | ||
|
The Providence Service Corporation | ||||
|
Consolidated Balance Sheets | ||||
|
(in thousands except share and per share data) | ||||
|
(Unaudited) |
||||
|
March 31, |
December 31, | |||
|
2012 |
2011 | |||
|
Assets |
||||
|
Current assets: |
||||
|
Cash and cash equivalents |
$ 47,055 |
$ 43,184 | ||
|
Accounts receivable, net of allowance of $5.6 million in |
||||
|
2012 and $5.8 million in 2011 |
95,765 |
87,163 | ||
|
Management fee receivable |
3,067 |
3,537 | ||
|
Other receivables |
1,829 |
1,601 | ||
|
Restricted cash |
4,071 |
4,654 | ||
|
Prepaid expenses and other |
14,976 |
15,989 | ||
|
Deferred tax assets |
1,435 |
1,965 | ||
|
Total current assets |
168,198 |
158,093 | ||
|
Property and equipment, net |
31,010 |
28,563 | ||
|
Goodwill |
113,979 |
113,737 | ||
|
Intangible assets, net |
57,649 |
59,474 | ||
|
Restricted cash, less current portion |
10,128 |
10,882 | ||
|
Other assets |
8,619 |
8,304 | ||
|
Total assets |
$ 389,583 |
$ 379,053 | ||
|
Liabilities and stockholders' equity |
||||
|
Current liabilities: |
||||
|
Current portion of long-term obligations |
$ 10,000 |
$ 10,000 | ||
|
Accounts payable |
2,913 |
4,461 | ||
|
Accrued expenses |
32,823 |
30,654 | ||
|
Accrued transportation costs |
53,815 |
47,657 | ||
|
Deferred revenue |
3,423 |
2,194 | ||
|
Reinsurance liability reserve |
9,386 |
11,921 | ||
|
Total current liabilities |
112,360 |
106,887 | ||
|
Long-term obligations, less current portion |
137,993 |
140,493 | ||
|
Other long-term liabilities |
13,903 |
9,740 | ||
|
Deferred tax liabilities |
11,940 |
12,910 | ||
|
Total liabilities |
276,196 |
270,030 | ||
|
Commitments and contingencies |
||||
|
Stockholders' equity: |
||||
|
Common stock: Authorized 40,000,000 shares; |
||||
|
$0.001 par value; 13,654,913 and 13,621,951 |
||||
|
issued and outstanding (including treasury shares) |
14 |
14 | ||
|
Additional paid-in capital |
177,333 |
176,172 | ||
|
Retained deficit |
(58,519) |
(61,561) | ||
|
Accumulated other comprehensive loss, net of tax |
(849) |
(1,128) | ||
|
Treasury stock, at cost, 631,013 and 623,576 shares |
(11,553) |
(11,435) | ||
|
Total Providence stockholders' equity |
106,426 |
102,062 | ||
|
Non-controlling interest |
6,961 |
6,961 | ||
|
Total stockholders' equity |
113,387 |
109,023 | ||
|
Total liabilities and stockholders' equity |
$ 389,583 |
$ 379,053 | ||
|
The Providence Service Corporation | ||||
|
Consolidated Statements of Cash Flows | ||||
|
(in thousands) | ||||
|
(Unaudited) | ||||
|
Three months ended | ||||
|
March 31, | ||||
|
2012 |
2011 | |||
|
Operating activities |
||||
|
Net income |
$ 3,042 |
$ 4,469 | ||
|
Adjustments to reconcile net income to net cash |
||||
|
provided by operating activities: |
||||
|
Depreciation |
1,729 |
1,321 | ||
|
Amortization |
1,897 |
1,928 | ||
|
Amortization of deferred financing costs |
286 |
479 | ||
|
Loss on extinguishment of debt |
- |
2,463 | ||
|
Provision for doubtful accounts |
(193) |
836 | ||
|
Deferred income taxes |
(441) |
(1,019) | ||
|
Stock based compensation |
1,067 |
690 | ||
|
Excess tax benefit upon exercise of stock options |
(21) |
(2) | ||
|
Other |
(18) |
380 | ||
|
Changes in operating assets and liabilities: |
||||
|
Accounts receivable |
(8,282) |
(7,109) | ||
|
Management fee receivable |
470 |
(118) | ||
|
Other receivables |
(228) |
442 | ||
|
Restricted cash |
(215) |
(402) | ||
|
Prepaid expenses and other |
445 |
1,215 | ||
|
Reinsurance liability reserve |
(1,811) |
(783) | ||
|
Accounts payable and accrued expenses |
592 |
2,131 | ||
|
Accrued transportation costs |
6,159 |
6,354 | ||
|
Deferred revenue |
1,230 |
(623) | ||
|
Other long-term liabilities |
3,446 |
9 | ||
|
Net cash provided by operating activities |
9,154 |
12,661 | ||
|
Investing activities |
||||
|
Purchase of property and equipment, net |
(4,168) |
(1,818) | ||
|
Acquisition of businesses, net of cash acquired |
(190) |
- | ||
|
Restricted cash for contract performance |
1,553 |
362 | ||
|
Purchase of short-term investments, net |
(25) |
(29) | ||
|
Net cash used in investing activities |
(2,830) |
(1,485) | ||
|
Financing activities |
||||
|
Repurchase of common stock for treasury |
(118) |
- | ||
|
Proceeds from common stock issued pursuant to |
||||
|
stock option exercise |
80 |
2 | ||
|
Excess tax benefit upon exercise of stock options |
21 |
2 | ||
|
Proceeds from long-term debt |
- |
100,000 | ||
|
Repayment of long-term debt |
(2,500) |
(112,304) | ||
|
Debt financing costs |
- |
(2,606) | ||
|
Capital lease payments |
(14) |
(4) | ||
|
Net cash used in financing activities |
(2,531) |
(14,910) | ||
|
Effect of exchange rate changes on cash |
78 |
90 | ||
|
Net change in cash |
3,871 |
(3,644) | ||
|
Cash at beginning of period |
43,184 |
61,261 | ||
|
Cash at end of period |
$ 47,055 |
$ 57,617 | ||
SOURCE The Providence Service Corporation
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