Tucson: Providence Service Corp Q1 Profit Improves

Growing health-care needs propel Providence’s 1st-quarter profit

By David Wichner

ARIZONA DAILY STAR 5/6/2010

Tucson-based Providence Service Corp. saw its first-quar­ter profit rise more than 50 per­cent on growing demand for its home-based social services and transportation services.

Providence posted net income of $9.1 million, or 66 cents per share, in the quarter that ended March 31. That compares with net income of $5.9 million, or 44 cents per share, in the same quar­ter last year, says an earnings re­port issued after the markets’ close Wednesday.

Revenue climbed 18 percent to $221 million, as revenue from transportation services rose 31 percent and social-services rev­enue rose 4 percent.

The first-quarter results beat analysts’ average earnings esti­mate of 46 cents per share, ac­cording to Thomson Financial Network.

Providence provides in-home counseling and other social serv­ices, as well as non-emergency medical transportation, under contracts with state and local governments.

Besides growth in revenue, earnings for the quarter benefited from lower costs to provide non­emergency transportation serv­ices, the company said.

In prepared remarks, Provi­dence Chairman and CEO Fletcher McCusker attributed the rising revenue to provisions in the recently passed health-care leg­islation that favor the company’s home-based services.

McCusker said the legislation also has a provision preventing changes to Medicaid eligibility

that favors the company.

“We remain optimistic that these federal mandates will trump the challenges many states face in managing budget deficits,” said McCusker, who planned to discuss the first­quarter results with analysts on a conference call today.

Based on the better-than­expected results, Providence upped its earnings and revenue forecasts for 2010. Providence now forecasts 2010 earnings per share of $1.38 to $1.41, up from previous guidance of $1.32 to $1.35. Revenue is an­ticipated to be between $860 million and $880 million, up from $850 million to $870 mil­lion.

Providence saw its stock price plunge from more than $30 per share in early 2008 to less than a dollar in October 2008, after the company wrote down the value of its assets as some government customers delayed payment or sought to scale back contracts amid the recession.

Providence’s shares closed Wednesday at $16.45, down 29 cents, in trading on the Nasdaq Stock Market.

Contact Assistant Business Editor David Wichner at dwichner@azstarnet.com or 573-4181.