Providence Service Corporation Reports Q2 2013 Results

TUCSON, Ariz., Aug. 7, 2013 /PRNewswire/ -- The Providence Service Corporation (Nasdaq: PRSC) today announced its financial results for the second quarter ended June 30, 2013.    

For the second quarter of 2013, the Company reported revenue of $287.6 million, an increase of 3.1% from $278.9 million in the comparable period of 2012.  Revenue from Providence's non-emergency transportation (NET) services segment grew 4.8% to $197.9 million in the second quarter from $188.8 million in the prior year period, benefitting from the full implementation of the New York City program and rate increases in a few key contracts.  Revenue from the social services segment declined 0.4% to $89.8 million from $90.1 million in the second quarter of 2012, primarily related to the impact of waivers granted under the No Child Left Behind Act which led to declines in educational tutoring revenue. 

Net income was $5.9 million, or $0.43 per diluted share, in the second quarter of 2013 compared to net income of $1.4 million, or $0.11 per diluted share in the prior year period.  Improved margins in the growing NET services segment, as well as stable margins on the social services side, contributed to the gain.  Adjusted EBITDA (non-GAAP) for the second quarter of 2013 was $15.7 million, representing an increase of 84.5% from $8.5 million in the same period last year.  A reconciliation of net income to Adjusted EBITDA (non-GAAP) is presented below. 

The Company had approximately 17.2 million individuals eligible to receive services under its NET contracts at June 30, 2013 an increase of 26.5% from approximately 13.6 million at June 30, 2012.  Providence's direct social service client census was approximately 53,100 and 53,000 at June 30, 2013 and 2012, respectively.  Total direct contracts numbered 584 at June 30, 2013 compared to 629 at June 30, 2012.  The decrease in the number of contracts was primarily due to the expiration of contracts related to our home based educational tutoring business which resulted from waivers granted under the No Child Left Behind Act. 

For the first six months of 2013, the Company reported revenue of $569.1 million, an increase of 5.6% from $539.1 million in the first six months of 2012.  Revenue from Providence's NET services segment grew 10.6% to $391.0 million in the first half of 2013 from $353.5 million in the prior year period.  Revenue from the social services segment decreased 4.0% to $178.1 million, down from $185.6 million in the first half of 2012.

Net income was $12.6 million, or $0.91 per diluted share, in the first half of 2013.  This compares to net income of $4.5 million, or $0.33 per diluted share, in the first half of 2012.  Adjusted EBITDA (non-GAAP) for the first six months of 2013 was $32.5 million, representing an increase of 73.0% from $18.8 million in the same period last year.  A reconciliation of net income to Adjusted EBITDA (non-GAAP) is presented below. 

"Our strong results year to date in 2013 were primarily driven by our NET business, which is continuing to benefit from the full effect of our contract start-up efforts in 2012 as well as the final phase-in of our New York City contract, which went live in January of this year," said Warren Rustand, Chief Executive Officer.  "I am also pleased with the improved margins we saw in the quarter, which resulted from excellent transportation cost management, as well as further growth of our commercial and managed care lines of business in California."

"On the social services side, even though we have experienced some softness in certain markets, we saw stable margins and our contract base remains solid as we completed our renewal cycle for the fiscal year beginning July 2013.  We remain committed to our focus on profitable growth and improving operating efficiencies and have initiated state-by-state growth initiatives to expand our current scope of services into both existing and new markets." 

"As we think about the balance of 2013 we will continue to position the Company for future growth opportunities in 2014 and beyond.  We remain focused on our core business and organic growth, improving operating efficiencies, investing in technology and performance management systems as well as pursuing tuck-in acquisitions. We believe we are uniquely positioned today to take advantage of favorable health care trends including: strategic alliances, partnerships, pilot programs, increased outsourcing of logistics management and new initiatives in the fields of integrated care."

"Finally, we are quite pleased with our refinancing that was announced earlier this week. We restructured and extended our senior credit facility which strengthens our capital structure and increases our borrowing capacity and flexibility for future growth."

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 8, 2013 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.  The call is also available by dialing (877) 546-5020 or for international callers (857) 244-7552 and by using the passcode 91955683. A replay of the teleconference will be available on http://investor.provcorp.com. A replay will also be available until August 15, 2013 by dialing (888) 286-8010 or (617) 801-6888, and using passcode 57517132.

About Providence
The Providence Service Corporation provides or manages the delivery of home and community based social services and NET management services to primarily government sponsored clients under programs such as welfare, juvenile justice, Medicaid and corrections.  Providence is unique in that it provides or manages its social services primarily in the client's own home or in community based settings rather than in hospitals or other treatment facilities and provides its NET management services through local transportation providers rather than an owned fleet of vehicles.  The Company provides a range of services through its direct entities to approximately 53,100 clients through 584 active contracts at June 30, 2013, with an approximate 17.2 million individuals eligible to receive the Company's non-emergency transportation services.  The Company had over $1.1 billion in revenues in 2012.

Non-GAAP Presentation
In addition to the financial results prepared in accordance with generally accepted accounting principles (GAAP) provided throughout this press release, the Company has provided EBITDA and Adjusted EBITDA, non-GAAP measurements, which present its earnings on a pro forma basis. Providence's management utilizes these non-GAAP measurements as a means to measure overall operating performance and to better compare current operating results with other companies within its industry.  Details of the excluded items and a reconciliation of the non-GAAP financial measures to the most comparable GAAP financial measure are presented in the table below. The non-GAAP measures do not replace the presentation of our GAAP financial results. The Company has provided this supplemental non-GAAP information because the Company believes it provides meaningful comparisons of the results of Providence's operations for the periods presented in this press release. The non-GAAP measures are not in accordance with, or an alternative for GAAP and may be different from non-GAAP measures used by some other companies.

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, 2012 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2013. 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.

--financial tables to follow--

SOURCE The Providence Service Corporation