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The Providence Service Corporation (PRSC)
Q4 2010 Earnings Conference Call
March 10, 2011 11:00 AM ET
Alison Ziegler – Vice President, Cameron Associates
Fletcher McCusker – Chairman and Chief Executive Officer
Michael Deitch – Chief Financial Officer
Craig Norris – Chief Operating Officer
Herman Schwarz – Chief Executive Officer, LogistiCare
Bob Labick – CJS Securities
Kevin Campbell – Avondale Partners
Rick D’Auteuil – Columbia Management
Mike Petusky – Noble Research
Tyson Bauer – Wealth Monitors
Previous Statements by PRSC
» The Providence Service Corporation Q1 2010 Earnings Call Transcript
» Providence Service Corporation F3Q08 (Qtr End 09/30/2008) Earnings Call Transcript
» The Providence Service Corporation Q2 2008 Earnings Call Transcript
I’d like to turn the conference over to Ms. Alison Ziegler with Cameron Associates. Please proceed ma’am.
Alison Ziegler – Vice President, Cameron Associates:
Thank you. Good morning, everyone, and thank you for joining us this morning for the Providence conference call and webcast to discuss the financial results for the fourth quarter and year end December 31, 2010. You should have all received a copy of the press release last night. If you would like to be added to an e-mail list, please call Cameron Associates at 212-554-5469.
Before we begin, please note that we have arranged for a replay of this call. The replay will be available approximately one hour after the call’s conclusion and will remain available until March 17th. The replay number is 888-286-8010, with the pass code 62631529. This call is also being webcast live with the replay available. To access the webcast, go to www.provcorp.com and look under the Event Calendar on the IR page.
Before we get started, I’d like to remind everyone of the Safe Harbor statement included in the press release and that the cautionary statements apply to today’s conference call as well. During the course of this call, the company will make projections or other forward-looking statements regarding future events or the company’s beliefs about its financial results for 2011 and beyond. We wish to caution you that such statements are just predictions and involve risks and uncertainties.
Actual results may differ materially. Factors which may affect actual results are detailed in the company’s filings with the SEC including the company’s upcoming 10-K. The company’s forecasts are dynamic and subject to change. Therefore, these forecasts speak only as of the date of this webcast, March 10th, 2011. The company may choose from time-to-time to update them, and if they do, we’ll disseminate the updates to the investing public.
I’d now like to turn the call over to Fletcher McCusker, Chairman and CEO. Go ahead, Fletcher.
Fletcher McCusker – Chairman and Chief Executive Officer:
Thank you very much, Alison. As usual here in Tucson are Craig Norris, our Chief Operating Officer and Michael Deitch, our Chief Financial Officer. Also on the phone from Atlanta is Herman Schwarz, the CEO of LogistiCare. We will all be available for your questions following our initial remarks.
This is a truly remarkable time for our company. Our services have never been more topical and more needed. We benefited last year from the unbelievable record Medicaid enrollment increases, particularly with the addition of the recently unemployed.
Consequently, LogistiCare has produced record revenue and record margins. The social services side flattened a bit over our record 2009 census, but we expect both segments to grow in 2011. The non-emergency transportation segment recently won the Delaware rebid and won the newly outsourced Wisconsin contract, bringing our recent win rate to five of eight of the last competitive NET bids.
We have engaged two members of our current banking syndicate to refinance our senior debt and take advantage of the debt market about 300 basis points under our turn in [ph] rates. We will voluntarily reduce our senior debt to $100 million, which will make our senior debt leverage approximately 1.5 times. We continue to look for the right diversification opportunities in both the DoD and senior care space throughout 2011.
I believe most of you know we are awaiting work [ph] on the Texas outsourcing of non-emergency transportation and have heard additional space will likely privatize their Medicaid transportation in 2011. As state budgets tightened and federal stimulus dollars dry up mid-year, our two products have become front end center for states that want to reduce costs.
Health and Human Services Secretary, Sebelius recently wrote to the nation’s governors reminding them that nearly 65% of the Medicaid dollar is still spent in out-of-home care, and that they should be aggressively reallocating funds to home-based delivery. She offered the help states [ph] in that effort and agreed that the federal government will pay 90% match from new community-based efforts versus the typical 60% match.
The repeal of the Healthcare Reform Act failed in the US Senate, that legislation will mandate that states develop additional community-based services. We’re going to briefly discuss last year and then focus most of our call on our 2011 guidance.
I’ll turn it over to Michael to go through the year.
Michael Deitch – Chief Financial Officer:
Thanks, Fletcher. Revenue for the fourth quarter totaled almost 219.3 million, up from 215.6 million for the fourth quarter of 2009. For the fourth quarter of 2010 compared to the fourth quarter of last year, home and community-based revenue declined by 2.5%, primarily due to our revenue decline in our Virginia operations, especially for December 2010. There was a great deal of snow in Virginia this past December, which adversely affected revenue in our Virginia school-based programs. Foster care revenue decreased 10.5% due primarily to changes in authorized levels of care related to our Tennessee operations.