TUCSON, Ariz., Aug. 4 /PRNewswire-FirstCall/ -- The Providence Service Corporation (Nasdaq: PRSC) today announced its financial results for the second quarter and six months ended June 30, 2010.
For the second quarter of 2010, the Company reported revenue of $222.3 million, an increase of 16% from $191.8 million for the comparable period in 2009. Revenue from Providence's social services segment grew 2% to $89.2 million in the second quarter from the prior year period and revenue from its non-emergency transportation (NET) services segment grew 28% to $133.1 million in the second quarter from the prior year period. Social services revenue grew in conjunction with census growth while NET revenue benefited from continued membership increases related to new and existing contracts.
The Company reported operating income of $17.0 million in the quarter ended June 30, 2010, a 22% increase from operating income of $14.0 million in the year ago period. Net income increased 39% to $7.3 million, or $0.54 per diluted share, in the second quarter of 2010 from net income of $5.3 million, or $0.40 per diluted share, in the second quarter of 2009. Earnings for the 2010 quarter benefited from continued growth in revenue and lower than anticipated cost to provide NET transportation services. These cost savings were due to reduced unit cost resulting from effective cost management and a positive shift in the service mix to lower cost modes such as mass transit. Earnings also benefited from a $1.3 million, or 25%, decline in interest expense in the second quarter of 2010 compared to the year ago period.
Providence's direct client census was approximately 60,700 at June 30, 2010, up from nearly 56,000 at June 30, 2009, and the Company had nearly eight million individuals eligible to receive services under its NET contracts at June 30, 2010. Direct contracts numbered 633 at June 30, 2010 up from 625 at June 30, 2009.
For the first six months of 2010, revenue increased 17% to $443.3 million from $378.5 million for the year ago period. Revenue from Providence's social services segment grew 3% to $177.7 million in the first six months of 2010 from the prior year period and revenue from its NET services segment grew 29% to $265.6 million in the first six months of 2010 from the prior year period. Operating income increased 27% to $36.9 million for the first six months of 2010 compared to $29.0 million in the first six months of 2009. Net income increased 47% to $16.4 million, or $1.19 per diluted share, for the six month period ended June 30, 2010 from net income of $11.1 million, or $0.84 per diluted share, for the six months ended June 30, 2009. Earnings for the first six 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 six months of 2009 was $1.0 million in costs associated with the Company's proxy contest.
At June 30, 2010, the Company had cash and cash equivalents of $54.1 million. During the quarter, the Company generated $9.4 million in cash from operations for a total of $24.8 million year to date and repaid $6.0 million of debt.
"This is our sixth record quarter in a row and our strong performance is a credit to our management team and the 10,000 incredible people in our owned and managed operations who are helping to make a difference in the lives of others," said Fletcher McCusker, Chairman and CEO. "It is an extraordinary time for our Company. As states struggle to manage the recession and federal Medicaid dollars are stretched, our services have never been more in demand. Year over year our direct client census is up over 8%. In our NET business, clients that are eligible to receive our services grew by nearly 19% year over year and increased another almost 56,000, or 1%, from the first quarter of this year. Our home and community based delivery system along with our outsourced transportation services are generating significant savings for state governments while at the same time our proven third-party outcome data supports the efficacy of our work."
As a result of the better than expected second quarter results, the Company is increasing its annual 2010 guidance. Providence now forecasts 2010 diluted earnings per share of $1.55 to $1.59, up from previous guidance of $1.38 to $1.41. 2010 revenue is anticipated to be approximately $870 to $900 million, up from the previous forecast of $860 to $880 million. This forecast does not include any unannounced contract wins or acquisitions.
For the third quarter of 2010, which is impacted by the absence of school based social services and higher utilization of NET services by students during the summer months, the Company expects revenue of approximately $210 million and earnings per diluted share of between $0.04 and $0.06.
"Having completed a successful contract renewal cycle, we anticipate continued gains overall in census. While challenges remain and certain states are struggling more than others, the overall trend is very positive," concluded Mr. McCusker.
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 5, 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) 679-8034 or for international callers (617) 213-4847 and by using the passcode 90235588. Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PBN6EWJQV. 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 August 12, 2010 by dialing (888) 286-8010 or (617) 801-6888, and using passcode 76175685.
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 60,700 clients through 633 active contracts at June 30, 2010, with an estimated nearly eight 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.
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The Providence Service Corporation Consolidated Statements of Income (in thousands except share and per share data) (UNAUDITED)
SOURCE The Providence Service Corporation