TUCSON, Ariz., May 7 /PRNewswire-FirstCall/ -- The Providence Service Corporation today announced results for the first quarter of 2008 ended March 31, 2008.
For the first quarter of 2008, the Company reported revenue of $173.7 million, an increase of 187% from $60.5 million for the comparable period in 2007, and above management's guidance of $170 million. Revenue from Providence's base social services segment grew 29.2% to $78.1 million in the first quarter and the acquired Non-Emergency Transportation Services segment totaled $95.6 million. Operating income was $10.9 million in the quarter, more than double the $5.3 million recorded in the year ago period. Net income was $3.7 million, or $0.29 per diluted share, in the quarter ended March 31, 2008, and included $1.6 million of management bonuses and $350,000 of additional audit costs as result of 2007 acquisition activity. In the year ago quarter, net income was $3.3 million, or $0.28 per diluted share. Providence's direct client census grew to over 55,000 at March 31, 2008 from 51,259 at March 31, 2007, and the Company had over seven million individuals eligible to receive services under its non-emergency transportation contracts. The number of direct contracts increased to 705 at March 31, 2008 from 577 at March 31, 2007 mostly due to contracts acquired in connection with the Company's acquisition of LogistiCare.
Managed entity revenue, which represents revenue of the not-for-profit social services organizations the Company provides management and/or administrative services to in return for a negotiated management fee, increased 5.8% to $56.4 million for the quarter ended March 31, 2008 from $53.3 million for the prior year period. Managed entity revenue is presented to provide investors with an additional measure of the size of the operations under Providence's management or administration and can help investors understand trends in management fee revenue. Managed client census grew to over 25,000 at March 31, 2008 as compared to 24,087 at March 31, 2007. Contracts of managed entities decreased to 325 from 328 quarter over quarter due to the consolidation of certain contracts.
"This is an exciting time for us," said Fletcher McCusker, Chairman and CEO. "Increased enrollment in Medicaid and other demographic trends continue to strain state government budgets, creating a rich environment for privatization. At the end of the first quarter we won our second largest social services contract, an $18 million workforce development contract in the greater El Paso area and we continue our track record of renewals, with no indication of contract terminations for the July procurement cycle. This is despite the economic downturn and negative rhetoric regarding government budgets. We continue to believe we are part of the solution to government budget issues."
"We are also making progress integrating our recent acquisition of LogistiCare. We have co-located some of our employees and have consolidated certain IT and back office functions where appropriate. We are also beginning to see some synergies in the areas of strategic business development. As we look ahead, we continue to see over $100 million of contracts up for bid for the fiscal 2009 procurement cycle and look forward to hearing about these awards over the next two quarters."
Guidance
The Company anticipates second quarter 2008 revenue of approximately $174-175 million with earnings per diluted share of between $0.36 and $0.38. At the current time the Company has no change to its prior 2008 annual guidance of $673 million in revenue and $1.45 to $1.50 in diluted earnings per share. The Company anticipates it will provide guidance for the remaining two quarters of 2008 after it has more visibility into the July procurement cycle.
Conference Call
Providence will hold a conference call at 11:00 a.m. EDT (9:00 a.m. MDT, 8:00 a.m. Arizona and PDT) on Thursday, May 8, 2008 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) 679-8034, or for international callers (617) 213-4847 and by using the passcode 12295591. Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PAJEHVMA6. 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 15, 2008 by dialing (888) 286-8010 or (617) 801-6888, and using passcode 82974931.
About Providence
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 services in the client's own home or other community setting. The Company provides a range of services to over 80,000 clients through approximately 1,030 contracts, with an estimated seven million individuals eligible to receive the Company's non-emergency transportation services related to its LogistiCare operations. Combined, the Company has a nearly $1 billion book of business with managed entities.
Certain statements herein, such as any statements about Providence's confidence or strategies or its expectations about revenues, results of operations, profitability, earnings per share, contracts, collections, award of contracts, acquisitions and related growth, growth resulting from initiatives in certain states, effective tax rate or market opportunities, constitute "forward-looking statements" within the meaning of the private Securities Litigation Reform Act of 1995. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause Providence's actual results or achievements to be materially different from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, reliance on government-funded contracts, risks associated with government contracting, risks involved in managing government business, legislative or policy changes, challenges resulting from growth or acquisitions, adverse media and legal, economic and other risks detailed in Providence's filings with the Securities and Exchange Commission, including its Form 10-K for the year ended December 31, 2007. Words such as "believe," "demonstrate," "expect," "estimate," "anticipate," "should" and "likely" and similar expressions identify 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. Providence undertakes no obligation to update any forward-looking statement contained herein.
--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, 2008 2007 Revenues: Home and community based services $65,896 $50,030 Foster care services 6,952 5,641 Management fees 5,242 4,784 Non-emergency transportation services 95,574 - 173,664 60,455 Operating expenses: Client service expense 61,483 46,803 Cost of non-emergency transportation services 86,248 - General and administrative expense 11,666 7,318 Depreciation and amortization 3,320 1,008 Total operating expenses 162,717 55,129 Operating income 10,947 5,326 Other (income) expense: Interest expense 5,285 111 Interest income (358) (363) Income before income taxes 6,020 5,578 Provision for income taxes 2,316 2,259 Net income $3,704 $3,319 Earnings (loss) per common share: Basic $0.30 $0.28 Diluted $0.29 $0.28 Weighted-average number of common shares outstanding: Basic 12,240,299 11,852,759 Diluted 12,452,041 11,983,421 The Providence Service Corporation Consolidated Balance Sheets (in thousands except share and per share data) March 31, December 31, 2008 2007 Assets (Unaudited) (Audited) Current assets: Cash and cash equivalents $49,196 $35,379 Accounts receivable-billed, net of allowance of $2.6 million 68,034 65,852 Accounts receivable - unbilled 2,149 2,250 Management fee receivable 10,460 10,166 Other receivables 1,706 2,524 Notes receivable 567 563 Notes receivable from related party 44 1,734 Restricted cash 7,071 8,842 Prepaid expenses and other 8,732 9,554 Deferred tax assets 3,247 5,094 Total current assets 151,206 141,958 Property and equipment, net 11,265 11,562 Notes receivable, less current portion 749 880 Goodwill 280,805 280,710 Intangible assets, net 95,836 98,254 Restricted cash, less current portion 5,031 6,461 Other assets 12,563 12,158 Total assets $557,455 $551,983 Liabilities and stockholders' equity Current liabilities: Current portion of long-term obligations $10,031 $8,950 Accounts payable 12,826 14,035 Accrued expenses 40,536 36,448 Accrued transportation costs 25,344 24,576 Deferred revenue 3,223 4,062 Reinsurance liability reserve 6,343 8,344 Total current liabilities 98,303 96,415 Long-term obligations, less current portion 233,225 236,469 Other long-term liabilities 4,221 190 Deferred tax liabilities 29,766 30,600 Total liabilities 365,515 363,674 Non-controlling interest 7,649 7,649 Commitments and contingencies Stockholders' equity: Common stock: Authorized 40,000,000 shares; $0.001 par value; 12,776,933 and 12,756,392 issued and outstanding (including treasury shares) 13 13 Additional paid-in capital 159,860 159,177 Common stock subscription receivable - (715) Retained earnings 36,055 32,351 Accumulated other comprehensive (loss) income, net of tax (378) 1,093 195,550 191,919 Less 612,026 treasury shares, at cost 11,259 11,259 Total stockholders' equity 184,291 180,660 Total liabilities and stockholders' equity $557,455 $551,983 The Providence Service Corporation Consolidated Statements of Cash Flows (in thousands) (UNAUDITED) Three months ended March 31, 2008 2007 Operating activities Net income $3,704 $3,319 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,241 300 Amortization 2,079 709 Amortization of deferred financing costs 620 47 Deferred income taxes (231) (186) Stock based compensation 554 453 Excess tax benefit upon exercise of stock options (27) - Other 19 - Changes in operating assets and liabilities, net of effects of acquisitions: Billed and unbilled accounts receivable, net (2,285) (3,609) Management fee receivable (295) (677) Other receivable 882 (715) Restricted cash 559 - Reinsurance liability reserve (46) (588) Prepaid expenses and other 749 512 Accounts payable and accrued expenses 4,760 1,491 Accrued transportation costs 768 - Deferred revenue (838) 18 Other long-term liabilities 29 - Net cash provided by operating activities 12,242 1,074 Investing activities Purchase of property and equipment, net (1,017) (289) Acquisition of businesses, net of cash acquired (346) (607) Restricted cash for contract performance 2,643 567 Sale / (purchase) of short-term investments, net 26 (76) Collection of notes receivable 2,531 30 Net cash provided by (used in) investing activities 3,837 (375) Financing activities Repurchase of common stock, for treasury - (10,376) Proceeds from common stock issued pursuant to stock option exercise 101 26 Excess tax benefit upon exercise of stock options 27 - Repayment of long-term debt (2,162) (116) Debt financing costs (33) - Net cash used in financing activities (2,067) (10,466) Effect of exchange rate changes on cash (195) - Net change in cash 13,817 (9,767) Cash at beginning of period 35,379 40,703 Cash at end of period $49,196 $30,936
