Providence Service Corporation Reports Q2 2012 Results

TUCSON, Ariz., Aug. 8, 2012 /PRNewswire/ -- The Providence Service Corporation (Nasdaq: PRSC) today announced its financial results for the second quarter ended June 30, 2012.    

For the second quarter of 2012, the Company reported revenue of $278.9 million, an increase of 18.5% from $235.3 million in the comparable period in 2011.  Revenue from Providence's non-emergency transportation (NET) services segment grew 33.0% to $188.8 million in the second quarter from $142.0 million in the prior year period, benefitting from new contract wins.  Revenue from the social services segment declined 3.5% to $90.1 million from $93.3 million in the second quarter of 2011.  Social services revenue was impacted primarily by select workforce development reductions in the U.S. and Canada.

Net income was $1.4 million, or $0.11 per diluted share, in the second quarter of 2012 compared to net income of $7.6 million, or $0.55 per diluted share, in the second quarter of 2011 including a $0.20 per share gain related to a June 2011 acquisition.  Impacting the second quarter 2012 results were previously announced expenses of approximately $519,000 associated with the company's consideration of strategic alternatives, unbudgeted stock compensation expense of $285,000 associated with the acceleration of vesting of restricted stock grants due to the passing of a company director and higher than expected expense due to increased healthcare claims activity under the company's self-funded employee health plan in an amount approaching $800,000. 

Providence's direct social service client census was approximately 53,000 at June 30, 2012 compared to 59,100 at June 30, 2011.  Total direct contracts numbered 629 at June 30, 2012 compared to 647 at June 30, 2011.  The decrease in the number of contracts was primarily due to tutoring reductions.  The Company had approximately 13.6 million individuals eligible to receive services under its NET contracts at June 30, 2012 an increase of 42% from approximately 9.6 million at June 30, 2011. 

For the first six months of 2012, the Company reported revenue of $539.1 million, an increase of 16.4% from $463.1 million in the first six months of 2011.  Revenue from Providence's NET services segment grew 25.8% to $353.5 million in the first half of 2012 from $280.9 million in the prior year period.  Revenue from the social services segment increased 1.9% to $185.6 million, up from $182.2 million in the first half of 2011.

Net income was $4.5 million, or $0.33 per diluted share, in the first half of 2012.  This compares to net income of $12.0 million, or $0.90 per diluted share, in the first half of 2011 which 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 of its senior credit facility offset by the $0.20 per share gain related to a June 2011 acquisition.

At June 30, 2012, the Company had unrestricted cash and cash equivalents of $50.2 million.  During the first half of 2012, the Company generated a total of $17.1 million in cash from operations.  At June 30, 2012, the Company had long term liabilities of $159.1 million, down from $179.1 million at June 30, 2011.

"LogistiCare had a solid second quarter and has been successful in its multi-market launch," said Fletcher McCusker, Chairman and CEO.  "As we finish ramping up the New York City contracts, we expect approximately $500,000 of remaining start up expense in the second half, making the new contract investment for the year a little over $3.5 million, or approximately $0.15 a share, much higher than expected.  After third quarter seasonality, the fourth quarter should be a more normalized quarter for us in terms of a run rate into 2013."  

"On the social services side, we experienced a strong renewal cycle with the exception of tutoring.  In 2013 and beyond, our opportunities should be enhanced by the recent U.S. Supreme Court decision providing for state led voluntary increases in Medicaid enrollment, fully funded by the federal government.  A number of states have already announced implementation plans for Medicaid expansion with only eight states having announced their intention to opt out.  Current estimates by Open Minds call for Medicaid to increase by 11 million enrollees versus 15 million enrollees under the initial reform legislation."

Guidance
The Company has elected to withdraw previously issued earnings guidance for 2012 citing a number of unknowns including continued and unpredictable start up costs related to LogistiCare's multiple contract wins, new contract opportunities for the NET segment, new bidding activity in Canada and recent social services wins in a Southwest and Midwest state along with managed care transitions in a number of states.

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 August 9, 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 (800) 510-0146 or for international callers (617) 614-3449 and by using the passcode 50301708. 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 16, 2012 by dialing (888) 286-8010 or (617) 801-6888, and using passcode 30949683.

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 53,000 clients through 629 active contracts at June 30, 2012, with an approximate 13.6 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," "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 and Quarterly Report on Form 10-Q for the quarter ended March 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.

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SOURCE The Providence Service Corporation