Tucson: Providence exceeds analysts’ 2nd-quarter estimates

By David Wichner

ARIZONA DAILY STAR 8/5/2010

Tucson-based Providence ServiceCorp. posted a 39percent increase Wednesday in second­quarter profit on higher revenue and lower-than-expected trans­portation costs. Providence, which provides social services under government contracts, handily beat Wall Street expectations and boosted its earnings and revenues projec­tions for the year.

In an earnings release after the close of trading, Providence re­ported net income of $7.3 million, or 54 cents per share, in the sec­ond quarter, compared with net income of $5.3 million, or 40 cents per share, in the second quarter of 2009.

Second-quarter revenue was $222.3 million, up 16 percent from the same period a year ago.

Analysts surveyed by Thomson Financial had estimated second­quarter earnings of 37 cents per share and $220.7 million in rev­enues.

Providence said revenue from its social-services segment, in­cluding services like in-home counseling, rose 2 percent, while revenue from nonemergency transportation services grew 28 percent.

Lower costs to provide non­emergency transportation serv­ices — partly due to more use of lower-cost modes such as mass transit — helped boost earnings, Providence said.

The company also benefited from a $1.3 million, or 25 percent, decline in interest expense from second-quarter 2009.

“As states struggle to manage the recession and federal Medic­aid dollars are stretched, our services have never been more in demand,” Providence Chairman and CEO Fletcher McCusker said in prepared remarks.

McCusker noted that the com­pany’s direct client count is up more than 8 percent from last year, while clients eligible for its transportation services grew 19 percent.

The company boosted its esti­mate of 2010 full-year earnings to a range of $1.55 to $1.59 per share, up from previous guidance of $1.38 to $1.41. The company esti­mated 2010 revenue of from $870 million to $900 million, up from its previous forecast of $860 mil­lion to $880 million.

Providence shares closed Wednesday at $14.41, up 54 cents or nearly 4 percent, in trading on the Nasdaq Stock Market. The shares have traded as high as $18.57 in the past year.

Providence stock, which trad­ed in the $30 range in 2007, has been on a choppy rebound since plunging to below a dollar during the depths of the Wall Street col­lapse in October 2008.

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