Exhibit 99.1
[PROVIDENCE SERVICE CORPORATION LOGO}
PROVIDENCE SERVICE CORPORATION
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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.
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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 atwww.provcorp.com orwww.fulldisclosure.com or by dialing (800) 218-0713. International callers should dial (303) 262-2190. A replay of the teleconference will be available onwww.provcorp.com andwww.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)
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| | | Three months ended
March 31
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| | | 2004
| | | 2003
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Revenues: | | | | | | | | |
Home and community based services | | $ | 12,974 | | | $ | 9,517 | |
Foster care services | | | 3,259 | | | | 2,538 | |
Management fees | | | 2,222 | | | | 1,359 | |
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| | | | 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 | |
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Total operating expenses | | | 16,541 | | | | 11,982 | |
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Operating income | | | 1,914 | | | | 1,432 | |
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Other (income) expense: | | | | | | | | |
Interest expense | | | 119 | | | | 553 | |
Interest income | | | (42 | ) | | | (9 | ) |
Equity in earnings of unconsolidated affiliate | | | — | | | | (57 | ) |
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Income before income taxes | | | 1,837 | | | | 945 | |
Provision for income taxes | | | 735 | | | | 359 | |
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Net income | | | 1,102 | | | | 586 | |
Preferred stock dividends | | | — | | | | 97 | |
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Net income available to common stockholders | | $ | 1,102 | | | $ | 489 | |
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Earnings per common share: | | | | | | | | |
Basic | | $ | 0.13 | | | $ | 0.22 | |
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Diluted | | $ | 0.13 | | | $ | 0.12 | |
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Weighted-average number of common shares outstanding: | | | | | | | | |
Basic | | | 8,492,573 | | | | 2,185,384 | |
Diluted | | | 8,785,917 | | | | 5,407,081 | |
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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
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| | | (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 | |
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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 | |
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Total assets | | $ | 53,410 | | | $ | 53,288 | |
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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 | |
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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 | |
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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 | ) |
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| | | | 45,222 | | | | 43,851 | |
Less 146,905 and 135,501 treasury shares, at cost | | | 299 | | | | 118 | |
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Total stockholders’ equity | | | 44,923 | | | | 43,733 | |
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Total liabilities and stockholders’ equity | | $ | 53,410 | | | $ | 53,288 | |
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—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
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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 | |
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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 | ) |
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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 | ) |
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Net cash provided by (used in) financing activities | | | (3,654 | ) | | | 1,722 | |
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Net change in cash | | | (5,948 | ) | | | 2 | |
Cash at beginning of period | | | 15,004 | | | | 1,019 | |
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Cash at end of period | | $ | 9,056 | | | $ | 1,021 | |
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