Providence Service Corporation Reports Third Quarter 2010 Financial Results in Line with Recently Raised Forecast; Raises Annual Guidance

TUCSON, Ariz., Nov. 3, 2010 /PRNewswire-FirstCall/ -- The Providence Service Corporation (Nasdaq: PRSC) today announced its financial results for the third quarter and nine months ended September 30, 2010.

For the third quarter of 2010, the Company reported revenue of $217.2 million, an increase of 5% from $206.8 million for the comparable period in 2009.  Revenue from Providence's non-emergency transportation (NET) services segment grew 9% to $135.9 million in the third quarter from the prior year period.  Revenue from the social services segment was $81.2 million, relatively unchanged from the record setting third quarter of 2009.  The Company continues to experience increased year over year Medicaid enrollment as well as referral trends away from out-of-home care.  NET revenue continued to benefit from continued membership increases related to new and existing contracts.  

Income before income taxes for the third quarter increased 15% to $5.3 million from $4.6 million in the prior year period.  

Net income was $2.9 million, or $0.22 per diluted share, in the third quarter of 2010 compared to net income of $4.4 million, or $0.34 per diluted share, in the third quarter of 2009.  Included in the third quarter of 2009 was a $1.4 million non-recurring tax benefit that improved earnings per share by $0.11.  

Providence's direct client census was approximately 54,700 at September 30, 2010, up from over 52,600 at September 30, 2009, and the Company had approximately 8.4 million individuals eligible to receive services under its NET contracts at September 30, 2010.  Direct contracts numbered 547 at September 30, 2010 down from 568 at September 30, 2009.

For the first nine months of 2010, revenue increased 13% to $660.4 million from $585.4 million for the year ago period.  Revenue from Providence's social services segment increased 1% to $258.9 million in the first nine months of 2010 from the prior year period and revenue from its NET services segment grew 22% to $401.5 million in the first nine months of 2010 from the prior year period.  Net income increased 24% to $19.3 million, or $1.44 per diluted share, for the nine month period ended September 30, 2010 from net income of $15.6 million, or $1.18 per diluted share, for the nine months ended September 30, 2009.  Earnings for the first nine months of 2010 benefited from continued growth in revenue and lower than anticipated utilization and unit cost to provide NET transportation services as well as a decline in interest expense compared to the year ago period.  Included in the first nine months of 2009 was the $1.4 million ($0.11 per diluted share) non-recurring tax benefit.  

At September 30, 2010, the Company had cash and cash equivalents of $64.6 million.  During the quarter, the Company generated $17.5 million in cash from operations for a total of $42.3 million year to date and repaid $18.3 million of debt.

"The growing need to assist Americans living in poverty continues to generate solid results for our Company," said Fletcher McCusker, Chairman and CEO.  "Our Company's mission, of serving the Medicaid population in their own homes and communities was somewhat novel when the Company was founded in 1996 and when Medicaid enrollment was approximately 13 million.  Today, with Medicaid enrollment approaching 60 million, our mission is critical and our services have never been more in demand.  Recent statistics indicate that over 15% of Americans now live below the United States guidelines for poverty.  With the continued increase in enrollees combined with tight budget environments, states are compelled to be smarter about how they spend money and home and community based services are significantly more cost effective.  We expect these trends to continue in the near term and are bracing for an additional 33% increase in eligible members in the year 2013 when certain provisions of recent health care reform legislation become effective and community based services become mandatory."

Updated Guidance

Providence now anticipates earnings per diluted share of $1.75 to $1.80 for 2010, which is an increase from prior guidance of $1.71 to $1.75 issued on September 21, 2010.  Revenue for 2010 is now expected to be in a range of $875 to $900 million.  For the fourth quarter, which benefits from the return of the Company's school based services, revenue is anticipated to be in a range of $215 to $240 million with earnings per diluted share of $0.31 to $0.36.

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, November 4, 2010, 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) 680-0892 or for international callers (617) 213-4858 and by using the passcode 81540937.  Participants may pre-register for the call at https://cossprereg.btci.com/prereg/key.process?key=PM3J4DLDJ.  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 November 11, 2010 by dialing (888) 286-8010 or (617) 801-6888, and using passcode 34305265.

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 54,700 clients through 547 active contracts at September 30, 2010, with an estimated nearly 8.4 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," "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, 2009. 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