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Exhibit 99.1

LOGO

 

AT THE COMPANY   AT CAMERON ASSOCIATES
Fletcher McCusker – Chairman and CEO   Alison Ziegler 212-554-5469
520-747-6600  

FOR IMMEDIATE RELEASE

Providence Service Corporation Reports Q1 2011 Results

in Line with Expectations

First Quarter Highlights:

  * Diluted EPS of $0.34 includes $0.11 of non-cash refinancing costs
  * New Jersey NET services contract expanded to new counties
  * Social Services segment benefitted from tightening Medicaid budgets
  * Debt refinancing completed with new $140 million senior secured credit facility for initial interest savings of approximately 300 basis points
  * Net cash provided by operations totaled $12.7 million

TUCSON, ARIZONA — May 4, 2011 — The Providence Service Corporation (Nasdaq: PRSC) today announced its financial results for the first quarter ended March 31, 2011.

For the first quarter of 2011, the Company reported revenue of $227.8 million, an increase of 3.1% from $221.0 million for the comparable period in 2010. Revenue from Providence’s non-emergency transportation (NET) services segment grew 4.9% to $139.0 million in the first quarter from the prior year period. Revenue from the social services segment was $88.8 million, up from $88.5 million in the first quarter of 2010.

Net income was $4.5 million, or $0.34 per diluted share, in the first quarter of 2011. This included a non-cash charge of approximately $2.5 million, or $0.11 per share, related to the write-off of unamortized deferred financing fees. This compares to net income of $9.1 million, or $0.66 per diluted share, in the first quarter of 2010. Increased utilization in NJ related to our geographic expansion there led to the higher NET service expenses in the quarter.

Providence’s direct client census was approximately 59,800 at March 31, 2011, compared to approximately 58,100 at December 31, 2010 and 62,200 at March 31, 2010. While the census was up from fourth quarter levels, year over year census was negatively impacted by a decline in correctional services and workforce development clients. The Company had approximately 9.6 million individuals eligible to receive services under its NET contracts at March 31, 2011 compared to 8.2 million at December 31, 2010 and 7.9 million at March 31, 2010. Direct contracts numbered 725 at March 31, 2011 down from 752 at March 31, 2010 primarily due to certain contract consolidations.

At March 31, 2011, the Company had unrestricted cash and cash equivalents of $57.6 million. During the first quarter of 2011, the Company generated a total of $12.7 million in cash from operations and refinanced its then existing senior debt facility and paid all amounts due under this debt facility with cash in the amount of $12.3 million and proceeds from its new senior debt facility. The Company currently has long term liabilities of $174.7 million, down from $194.8 million at March 31, 2010.

—more—

64 E. Broadway Blvd. • Tucson, Arizona 85701 •Tel 520/747-6600 •Fax 520/747-6605 •www.provcorp.com


Providence Service Corporation

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“Our first quarter results were in line with previously issued guidance,” stated Fletcher McCusker, Chairman and CEO. “The Social Services segment performed ahead of budget due to increased market demand for less expensive home and community based delivery services while our NET segment was below budget due to the expansion of our successful program in the State of New Jersey into several new rural counties. This expansion has created a short term, unanticipated decrease in margin due to higher utilization in the new counties relative to the already established per member per month reimbursement. Effective July 1, 2011, our rates will be adjusted to account for the higher expense in New Jersey, improving the situation in the second half of the year.”

Mr. McCusker added, “While state budget pressures and system reforms have the potential to challenge our overall profit margins, they also favor our home and community based model. We believe we are well positioned to be part of the solution in these challenging times and believe our business model will allow us to remain flexible and make adjustments to help mitigate any pressures that arise.”

Guidance

As previously announced, revenue for the second quarter of 2011 is anticipated to be in a range of $225 to $235 million compared to revenue of $222 million in the year ago period. We believe the margin pressure in New Jersey will lead to a shortfall in our second quarter budget by approximately $0.05 per share. As a result, we now anticipate diluted earnings per share to be approximately $0.35, down from prior expectations of $0.40 to $0.42. Diluted earnings per share was $0.54 in the second quarter of 2010.

Providence anticipates providing guidance for the full year 2011 in late Q2 or early Q3, subsequent to the completion of the Company’s Social Services segment contract renewal cycle. In addition, the Company anticipates its tax rate to be approximately 42.5%.

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, May 5, 2011, 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) 679-8018 or for international callers (617) 213-4845 and by using the passcode 91849968. Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PX8XUU8U6. 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 12, 2011 by dialing (888) 286-8010 or (617) 801-6888, and using passcode 68227993.

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 59,800 clients through 725 active contracts at March 31, 2011, with an estimated 9.6 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

 

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Providence Service Corporation

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“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, 2010. 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—

 


Providence Service Corporation

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The Providence Service Corporation

Consolidated Statements of Income

(in thousands except share and per share data)

(UNAUDITED)

 

     Three months ended March 31,  
     2011     2010  

Revenues:

    

Home and community based services

   $ 77,244      $ 76,465   

Foster care services

     8,251        8,735   

Management fees

     3,345        3,295   

Non-emergency transportation services

     138,966        132,464   
                
     227,806        220,959   

Operating expenses:

    

Client service expense

     72,814        73,644   

Cost of non-emergency transportation services

     126,108        113,487   

General and administrative expense

     11,924        10,788   

Depreciation and amortization

     3,249        3,127   
                

Total operating expenses

     214,095        201,046   
                

Operating income

     13,711        19,913   

Other (income) expense:

    

Interest expense

     3,732        4,374   

Loss on extinguishment of debt

     2,463        —     

Interest income

     (59     (71
                

Income before income taxes

     7,575        15,610   

Provision for income taxes

     3,106        6,503   
                

Net income

   $ 4,469      $ 9,107   
                

Earnings per share:

    

Basic

   $ 0.34      $ 0.69   

Diluted

   $ 0.34      $ 0.66   

Weighted-average number of common shares outstanding:

    

Basic

     13,222,566        13,166,784   

Diluted

     13,320,443        14,936,288   

 

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Providence Service Corporation

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The Providence Service Corporation

Consolidated Balance Sheets

(in thousands except share and per share data)

 

     March 31,
2011
    December 31,
2010
 
     (Unaudited)     (Audited)  

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 57,617      $ 61,261   

Accounts receivable, net of allowance of $5.3 million in 2011 and 2010

     82,549        76,112   

Management fee receivable

     5,958        5,840   

Other receivables

     3,488        3,930   

Restricted cash

     7,354        7,314   

Prepaid expenses and other

     13,950        15,478   

Deferred tax assets

     2,144        1,633   
                

Total current assets

     173,060        171,568   

Property and equipment, net

     16,907        16,401   

Goodwill

     113,850        113,783   

Intangible assets, net

     64,615        66,442   

Restricted cash, less current portion

     9,080        9,080   

Other assets

     9,382        9,659   
                

Total assets

   $ 386,894      $ 386,933   
                

Liabilities and stockholders’ equity

    

Current liabilities:

    

Current portion of long-term obligations

   $ 16,626      $ 18,113   

Accounts payable

     3,165        2,888   

Accrued expenses

     35,468        33,551   

Accrued transportation costs

     48,222        41,869   

Deferred revenue

     4,753        5,374   

Reinsurance liability reserve

     9,745        11,898   
                

Total current liabilities

     117,979        113,693   

Long-term obligations, less current portion

     153,374        164,190   

Other long-term liabilities

     10,047        8,721   

Deferred tax liabilities

     11,295        11,580   
                

Total liabilities

     292,695        298,184   

Commitments and contingencies

    

Stockholders’ equity:

    

Common stock: Authorized 40,000,000 shares; $0.001 par value; 13,580,813 and 13,580,385 issued and outstanding (including treasury shares)

     14        14   

Additional paid-in capital

     173,160        172,540   

Retained deficit

     (74,032     (78,501

Accumulated other comprehensive loss, net of tax

     (520     (881

Treasury stock, at cost, 619,768 shares

     (11,384     (11,384
                

Total Providence stockholders’ equity

     87,238        81,788   

Non-controlling interest

     6,961        6,961   
                

Total stockholders’ equity

     94,199        88,749   
                

Total liabilities and stockholders’ equity

   $ 386,894      $ 386,933   
                

 

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Providence Service Corporation

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The Providence Service Corporation

Consolidated Statements of Cash Flows

(in thousands)

(UNAUDITED)

 

     Three months ended
March 31,
 
     2011     2010  

Operating activities

    

Net income

   $ 4,469      $ 9,107   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation

     1,321        1,202   

Amortization

     1,928        1,925   

Amortization of deferred financing costs

     479        629   

Loss on extinguishment of debt

     2,463        —     

Provision for doubtful accounts

     836        1,930   

Deferred income taxes

     (1,019     (503

Stock based compensation

     690        119   

Excess tax benefit upon exercise of stock options

     (2     (18

Other

     380        (146

Changes in operating assets and liabilities:

    

Accounts receivable

     (7,109     (9,754

Management fee receivable

     (118     30   

Other receivables

     442        388   

Restricted cash

     (402     (305

Prepaid expenses and other

     1,215        385   

Reinsurance liability reserve

     (783     (892

Accounts payable and accrued expenses

     2,131        5,470   

Accrued transportation costs

     6,354        6,254   

Deferred revenue

     (623     (395

Other long-term liabilities

     9        (28
                

Net cash provided by operating activities

     12,661        15,398   

Investing activities

    

Purchase of property and equipment, net

     (1,818     (2,524

Restricted cash for contract performance

     362        (47

Purchase of short-term investments, net

     (29     (31
                

Net cash used in investing activities

     (1,485     (2,602

Financing activities

    

Proceeds from common stock issued pursuant to stock option exercise

     2        70   

Excess tax benefit upon exercise of stock options

     2        18   

Proceeds from long-term debt

     100,000        —     

Repayment of long-term debt

     (112,304     (8,623

Debt financing costs

     (2,606     —     

Capital lease payments

     (4     (2
                

Net cash used in financing activities

     (14,910     (8,537
                

Effect of exchange rate changes on cash

     90        95   
                

Net change in cash

     (3,644     4,354   

Cash at beginning of period

     61,261        51,157   
                

Cash at end of period

   $ 57,617      $ 55,511   
                

 

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