FORM 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of Earliest Event Reported): May 5, 2004

 


 

The Providence Service Corporation

(Exact name of registrant as specified in its charter)

 

Delaware   000-50364   86-0845127

(State or other jurisdiction

of incorporation)

 

(Commission File

Number)

 

(I.R.S. Employer

Identification No.)

 

5524 East Fourth Street, Tucson Arizona   85711
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (520) 747-6600

 

N/A

(Former name, former address, and former fiscal year, if changed since last report)


ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS

 

(c)   Exhibits:

 

99.1   Earnings release issued by The Providence Service Corporation on May 5, 2004.

 

ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

 

On May 5, 2004, The Providence Service Corporation (“Providence”) issued an earnings release reporting its financial results for the three months ended March 31, 2004. A copy of this earnings release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.


SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

        THE PROVIDENCE SERVICE CORPORATION
Date: May 5, 2004       By:   /S/ MICHAEL N. DEITCH
           
            Michael N. Deitch
            Chief Financial Officer
Earnings Release

Exhibit 99.1

[PROVIDENCE SERVICE CORPORATION LOGO}

 

PROVIDENCE SERVICE CORPORATION

 

AT THE COMPANY

Fletcher McCusker – Chairman and CEO

Kate Blute – Director of Investor and Public Relations

520/747-6600

 

AT FINANCIAL RELATIONS BOARD

Alison Ziegler – General Information

Susan Garland – Analyst Information

212/445-8300

Cynthia Martin – Media Information

312/640-6741

FOR IMMEDIATE RELEASE

 

Providence Service Corporation Reports

First Quarter 2004 Financial Results

 

Highlights:

 

  Total revenue grew 38% to $18.5 million, a record high
  Managed revenue grew 37% to $20.3 million, also a record high
  Subsequent to the end of the quarter announced the closing of both a Pennsylvania acquisition and a Pennsylvania management contract

 

TUCSON, ARIZONA – May 5, 2004 – The Providence Service Corporation (Nasdaq: PRSC) today announced financial results for the first quarter ended March 31, 2004.

 

For the first quarter of 2004, the Company reported net income available to common stockholders of $1.1 million, or $0.13 per diluted share. This compares to net income available to common stockholders of $489,000, or $0.12 per diluted share, in the quarter ended March 31, 2003. Revenue was $18.5 million for the first quarter of 2004, an increase of 38% from $13.4 million for the same quarter last year. Providence’s direct client census grew to 6,787 at March 31, 2004, a 39% increase from 4,877 at March 31, 2003. The number of direct contracts increased to 141 at March 31, 2004 from 116 at March 31, 2003.

 

Managed revenue, which represents revenue of the not-for-profit social services organizations the Company manages in return for a negotiated management fee, increased 37% to $20.3 million from $14.8 million for the same quarter one year ago. Managed revenue is presented to provide investors with an additional measure of the size and depth of the operations under Providence’s direction and can help investors understand trends in management fee revenue. Managed client census grew to 8,222 at March 31, 2004 as compared to 7,937 at March 31, 2003 and 7,642 at December 31, 2003. Contracts of managed entities grew from 58 to 64 year over year.

 

Fletcher McCusker, Chairman and CEO of Providence, commented, “We are extremely pleased with our first quarter results. We continue to execute in every facet of our business from new contract wins, adding locations and clients, cross-selling our services as well as acquisitions. During the quarter we completed the current phase of the infrastructure build up to support our Florida business, which now represents Providence’s largest state, and we acquired Dockside Services, an Indiana-based youth services provider.

 

—more—

 

5524 E. Fourth Street • Tucson, Arizona 85711 • Tel 520/747-6600 • Fax 520/747-6605 • www.provcorp.com

 


Providence Service Corporation Reports First Quarter Financial Results

Page 2

 

This momentum carried into the second quarter of 2004, as we established a platform in Pennsylvania through our recent Pottsville Behavioral Counselling Group acquisition and the long term management contract we signed with The ReDCo Group. Similar to Florida, we believe Pennsylvania offers valuable opportunities for growth.”

 

“For 2004, the Company continues to be comfortable with earnings per share estimates of $0.70 to $0.72 per share. Looking ahead, we will enter our second of two annual government procurement periods in July 2004 and, while we cannot guarantee that Providence will win any of the business in this procurement cycle, we are currently negotiating for $13.3 million of new business for 2004 and 2005.”

 

Mr. McCusker concluded, “On April 2, we successfully completed a follow-on offering that increased our public float to 86% of our 9,278,054 current shares of common stock outstanding. We remain excited about the opportunities ahead of us and are as convinced as ever that our strategy of providing creative alternatives to institutional care while generating savings to state governments continues to resonate in the marketplace.”

 

Providence will hold a conference call at 11:00 a.m. ET (9:00 a.m. MT, 8:00 a.m. PT) on Thursday, May 6, 2004. Interested parties are invited to listen to the call live over the Internet at www.provcorp.com or www.fulldisclosure.com or by dialing (800) 218-0713. International callers should dial (303) 262-2190. A replay of the teleconference will be available on www.provcorp.com and www.fulldisclosure.com. A replay will also be available until May 13, 2004 by dialing (800) 405-2236 or (303) 590-3000, and using passcode 578474.

 

Providence Service Corporation, through its owned and managed entities, provides home and community based social services to government sponsored clients under programs such as welfare, juvenile justice, Medicaid and corrections. Providence operates no beds, treatment facilities, hospitals, or group homes preferring to provide services in the client’s own home or other community setting. Through its owned and managed entities, Providence maintains 205 government contracts in 17 states and the District of Columbia as of March 31, 2004.

 

Certain statements herein, such as any statements about Providence’s confidence or strategies or its expectations about revenues, results of operations, profitability, contracts or market opportunities, constitute “forward-looking statements” within the meaning of the private Securities Litigation Reform Act of 1995. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause Providence’s actual results or achievements to be materially different from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, reliance on government-funded contracts, risks associated with government contracting, risks involved in managing government business, legislative or policy changes, challenges resulting from growth or acquisitions, adverse media and legal, economic and other risks detailed in Providence’s other filings with the Securities and Exchange Commission. Words such as “believe,” “demonstrate,” “expect,” “estimate,” “anticipate,” “should” and “likely” and similar expressions identify 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. Providence undertakes no obligation to update any forward-looking statement contained herein.

 

—financial tables to follow—

 

 


Providence Service Corporation Reports First Quarter Financial Results

Page 3

 

The Providence Service Corporation

Condensed Consolidated Statements of Operations

(in thousands except share and per share data)

(UNAUDITED)

     Three months ended
March 31


 
     2004

    2003

 

Revenues:

                

Home and community based services

   $ 12,974     $ 9,517  

Foster care services

     3,259       2,538  

Management fees

     2,222       1,359  
    


 


       18,455       13,414  

Operating expenses:

                

Client service expense

     13,750       10,468  

General and administrative expense

     2,563       1,245  

Depreciation and amortization

     228       269  
    


 


Total operating expenses

     16,541       11,982  
    


 


Operating income

     1,914       1,432  

Other (income) expense:

                

Interest expense

     119       553  

Interest income

     (42 )     (9 )

Equity in earnings of unconsolidated affiliate

     —         (57 )
    


 


Income before income taxes

     1,837       945  

Provision for income taxes

     735       359  
    


 


Net income

     1,102       586  

Preferred stock dividends

     —         97  
    


 


Net income available to common stockholders

   $ 1,102     $ 489  
    


 


Earnings per common share:

                

Basic

   $ 0.13     $ 0.22  
    


 


Diluted

   $ 0.13     $ 0.12  
    


 


Weighted-average number of common shares outstanding:

                

Basic

     8,492,573       2,185,384  

Diluted

     8,785,917       5,407,081  

 

—more—


Providence Service Corporation Reports First Quarter Financial Results

Page 4

 

The Providence Service Corporation

Condensed Consolidated Balance Sheets

(in thousands except share and per share data)

 

     March 31
2004


    December 31
2003


 
     (Unaudited)     (Audited)  

Assets

                

Current assets:

                

Cash and cash equivalents

   $ 9,056     $ 15,004  

Accounts receivable, net of allowance of $97,000 and $69,000

     10,984       9,199  

Held-to-maturity investments

     3,986       3,973  

Management fee receivable

     3,100       3,577  

Prepaid expenses and other

     1,042       947  

Deferred tax asset

     617       617  
    


 


Total current assets

     28,785       33,317  

Property and equipment, net

     1,783       1,772  

Note receivable from not-for-profit affiliate

     407       407  

Goodwill

     18,447       13,429  

Intangible assets, net

     1,240       986  

Deferred tax asset

     1,543       1,543  

Other assets

     1,205       1,834  
    


 


Total assets

   $ 53,410     $ 53,288  
    


 


Liabilities and stockholders' equity

                

Current liabilities:

                

Accounts payable

   $ 1,526     $ 1,001  

Accrued expenses

     5,754       4,732  

Current portion of capital lease obligations

     93       89  

Current portion of long-term obligations

     —         1,494  
    


 


Total current liabilities

     7,373       7,316  

Capital lease obligations, less current portion

     114       139  

Long-term obligations, less current portion

     1,000       2,100  

Stockholders’ equity:

                

Common stock: Authorized 40,000,000 shares; $0.001 par value; 8,529,531 and 8,481,839 issued and outstanding (including treasury shares)

     9       8  

Additional paid-in capital

     52,041       51,773  

Accumulated deficit

     (6,828 )     (7,930 )
    


 


       45,222       43,851  

Less 146,905 and 135,501 treasury shares, at cost

     299       118  
    


 


Total stockholders’ equity

     44,923       43,733  
    


 


Total liabilities and stockholders’ equity

   $ 53,410     $ 53,288  
    


 


 

—more—


Providence Service Corporation Reports First Quarter Financial Results

Page 5

 

The Providence Service Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(UNAUDITED)

 

     Three months ended
March 31


 
     2004

    2003

 

Operating activities

                

Net income

   $ 1,102     $ 586  

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

                

Depreciation

     151       146  

Amortization

     78       123  

Amortization of deferred financing costs and discount on investment

     21       —    

Stock compensation

     43       43  

Equity in earnings of unconsolidated affiliate

     —         (57 )

Changes in operating assets and liabilities, net of effects of acquisitions:

                

Trade accounts receivable, net

     (1,785 )     (361 )

Management fee receivable

     498       (472 )

Prepaid expenses and other

     (177 )     68  

Accounts payable

     525       (1 )

Accrued expenses

     856       183  
    


 


Net cash provided by operating activities

     1,312       258  

Investing activities

                

Purchase of property and equipment

     (130 )     (125 )

Acquisition of businesses, net of cash acquired

     (3,476 )     (1,853 )
    


 


Net cash used in investing activities

     (3,606 )     (1,978 )

Financing activities

                

Net payments on revolving note

     (94 )     (624 )

Payments of capital leases

     (21 )     (58 )

Repayments of short-term debt

     (1,400 )     —    

Repayments of long-term debt

     (2,100 )     —    

Proceeds from common stock issued pursuant to stock option exercise, net

     45       —    

Public offering costs

     (84 )     (29 )

Proceeds from short-term debt

     —         672  

Proceeds from long-term debt

     —         1,911  

Debt financing costs

     —         (150 )
    


 


Net cash provided by (used in) financing activities

     (3,654 )     1,722  
    


 


Net change in cash

     (5,948 )     2  

Cash at beginning of period

     15,004       1,019  
    


 


Cash at end of period

   $ 9,056     $ 1,021  
    


 


 

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