Providence Service Corporation Completes Contract Renewal Cycle with Net Gain in Contract Value
TUCSON, Ariz., July 6 /PRNewswire-FirstCall/ -- The Providence Service Corporation (Nasdaq: PRSC) today announced that it has completed the renewal cycle with all of its payers for its fiscal 2010-2011 contract renewal cycle and expects an overall net gain in contract value primarily as a result of increased volume.
For the social services segment, all but one of 752 contracts have been renewed with relatively stable rates overall and anticipated increases in volume. On the non-emergency transportation services management (NET) side, all contracts except the state of Missouri have been renewed. Missouri has announced its intent to award the current LogistiCare contract to a Missouri based competitor, subject to appeal. In the event this contract is not renewed it would be a fourth quarter event with budgeted revenue of approximately $8.0 million in the fourth quarter and budgeted earnings per share impact of approximately $0.02. This lost revenue and earnings is expected to be offset by recent wins in Arkansas, contractual rate increases in certain states, volume increases and better than expected second quarter performance.
Fletcher McCusker, Chairman and CEO, commented, "While we may lose in Missouri, this particular contract was under intense rate pressure. We remain well positioned versus out of home competitors and increasing Medicaid enrollment should lead to volume increases, a key driver of our current success. We also continue to win our fair share of contracts in both the social service and NET businesses. As a result, we anticipate being ahead of our current earnings guidance of $1.38 to $1.41 per diluted share, which includes $0.24 of total accrued cash incentive compensation awards for 2010. The Company expects to update our 2010 revenue and earnings guidance in conjunction with our second quarter earnings release in early August."
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 62,200 clients through 752 active contracts at March 31, 2010, with an estimated 7.9 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.
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