Providence Service Corporation Reports Q1 2013 Results

TUCSON, Ariz., May 8, 2013 /PRNewswire/ -- The Providence Service Corporation (Nasdaq: PRSC) today announced its financial results for the first quarter ended March 31, 2013.    

First Quarter 2013 Results
For the first quarter of 2013, the Company reported revenue of $281.5 million, an increase of 8% from $260.1 million in the comparable period in 2012.  Revenue from Providence's non-emergency transportation (NET) services segment grew 17% to $193.1 million in the first quarter from $164.7 million in the prior year period, benefiting from new contacts and program expansions in certain NET markets.  Revenue from the social services segment declined 7% to $88.4 million from $95.5 million in the first quarter of 2012.  Social services revenue was impacted primarily by 2012 contract terminations related to the workforce development business in Canada as well as the expiration of contracts related to Providence's home based educational tutoring business due to changes in the No Child Left Behind Act.  Excluding Canada and educational tutoring, social services revenue would have declined by approximately 2% which was due primarily to the impact of inclement weather on billable hours in the Northeast.   

Providence reported net income of $6.7 million, or $0.49 per diluted share, in the first quarter of 2013 compared to net income of $3.0 million, or $0.23 per diluted share, in the first quarter of 2012.  Earnings for the first quarter of 2013 were positively impacted by the full implementation of NET contracts that were in start-up mode in the first quarter of 2012, the recent expansion of business in existing markets and negotiated rate adjustments in select programs in both the social services and NET segments.  The prior year quarter included a non-recurring tax benefit of approximately $0.03 per share related to a tax accounting method change for a 2011 acquisition.  Adjusted EBITDA (non-GAAP) for the first quarter of 2013 was $16.8 million, representing an increase of 64% from $10.3 million in the same period last year.  A reconciliation of net income to Adjusted EBITDA (non-GAAP) is presented below. 

The Company had approximately 16.8 million individuals eligible to receive services under its NET contracts at March 31, 2013, an increase of 36% from approximately 12.4 million at March 31, 2012.  Providence's direct social service client census was approximately 54,500 at March 31, 2013 compared to approximately 61,900 at March 31, 2012.  The decrease in the number of clients was primarily due to contract terminations in certain markets and expiration of contracts related to our home based educational tutoring business which resulted from waivers granted under the No Child Left Behind Act.    

At March 31, 2013, the Company had unrestricted cash and cash equivalents of $83.1 million.  During the first quarter of 2013, the Company generated a total of $29.8 million in cash from operations.  At March 31, 2013, the Company had total long-term obligations of $127.3 million compared to $130.0 million at December 31, 2012.

"We are pleased with our NET results in the quarter, which saw the effect of a full quarter of revenue from our NET start-up efforts in 2012 as well as the final phase-in of our New York City contract , which went live in January," said Warren Rustand, Chief Executive Officer.  "Our results also benefited from expanded NET business in Georgia and South Carolina compared to the year ago period, as well as further growth of our commercial and managed care lines of business in California. Additionally, we are starting to benefit from negotiated rate adjustments in select programs."

"On the social services side, our contract base is solid going into the 2013 renewal cycle with the implementation of several new programs including our foster care contract in Texas.  We remain committed to our focus on operating efficiencies and improving returns.  We saw some initial benefit in the first quarter as a result of performance improvements and positive rate increases in certain markets.  As we look to the remainder of 2013 and beyond, we will continue to invest in our infrastructure and take the necessary steps to position the company to benefit from emerging trends in healthcare, particularly the development of integrated models of healthcare delivery and increased outsourcing of transportation management."

Conference Call
Providence will hold a conference call at 11:00 a.m. EDT (8:00 a.m. Arizona and PDT) Thursday, May 9, 2013 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) 318-8617 or for international callers (617) 399-5136 and by using the passcode 57144115.  A replay of the teleconference will be available on http://investor.provcorp.com.  A replay will also be available until May 16, 2013 by dialing (888) 286-8010 or (617) 801-6888, and using passcode 44683383.

About Providence
The Providence Service Corporation provides or manages the delivery of home and community based social services and NET management services to primarily government sponsored clients under programs such as welfare, juvenile justice, Medicaid and corrections.  Providence is unique in that it provides or manages social services primarily in the client's own home or in community based settings rather than in hospitals or other treatment facilities, and provides its NET management services through local transportation providers rather than an owned fleet of vehicles.  The Company provides a range of services through its direct entities to approximately 54,500 clients through 649 active contracts at March 31, 2013, with an approximate 16.8 million individuals eligible to receive the Company's non-emergency transportation services.  The Company had over $1.1 billion in revenues in 2012.

Non-GAAP Presentation
In addition to the financial results prepared in accordance with generally accepted accounting principles (GAAP) provided throughout this press release, the Company has provided EBITDA and Adjusted EBITDA, non-GAAP measurements, which present its earnings on a pro forma basis. Providence's management utilizes these non-GAAP measurements as a means to measure overall operating performance and to better compare current operating results with other companies within its industry.  Details of the excluded items and a reconciliation of the non-GAAP financial measures to the most comparable GAAP financial measure are presented in the table below. The non-GAAP measures do not replace the presentation of our GAAP financial results. The Company has provided this supplemental non-GAAP information because the Company believes it provides meaningful comparisons of the results of Providence's operations for the periods presented in this press release. The non-GAAP measures are not in accordance with, or an alternative for GAAP and may be different from pro forma measures used by some companies.  

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, 2012. 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--

 

SOURCE The Providence Service Corporation