Service provider Providence expects higher 4Q profit than forecast with Medicaid enrollment up

Service provider Providence expects 4Q profit

TUCSON, Ariz. — Social service provider Providence Service Corp. predicted Monday that it will earn more than expected in the fourth quarter after it slashed expenses and earned more from Medicaid programs.

Providence, which offers government-sponsored services, said it will report earnings of 42 cents a share for the final three months of 2009. That compares with a loss in the fourth quarter of 2008.

Its revenue increased 21 percent for the quarter to $216 million, the company said.

CEO Fletcher McCusker said the company is benefiting from increased Medicaid enrollment and from other changes in government social programs. The company’s annual profit also was “achieved by freezing salaries, reducing stock compensation and reducing employee benefits.”

The results beat the company’s earlier guidance that it would earn 33 cents to 35 cents per share on revenue of $209 million to $215 million. Analysts expected it to earn 35 cents per share on revenue of $213 million.

Providence will report its fourth-quarter earnings March 10.

For the full year, Providence said it expects to report earning $1.60 per share, including a nonrecurring tax benefit of $1.4 million, or 11 cents per share. It expects to report annual revenue up 16 percent to $801 million.

In 2010, the company expects to earn $1.32 to $1.35 a share on revenue of $850 million to $870 million. For the first quarter, it expects to earn 45 cents to 48 cents per share on revenue of $210 million to $220 million.

Company shares dipped 36 cents to $11.75 in Monday trading.