There are many publically traded companies that often get overlooked because they are not flashy, or well known, but that does not mean that they do not post big profits. One of those overlooked areas is in a sizable sector, but rarely gets any attention: Specialized Health Services. The leader in this sub segment is Providence Service Corp (PRSC). This company’s non-emergency transportation segment has produced a 15% CAGR (compound annual growth rate) over the past six years. Further, with the recent acquisitions of Ingeus, and Matrix Medical Networks, management has been able to seamlessly integrate them into their business model which produced revenues of $140.7 million in the second quarter 2015. Therefore, Providence Service is the Zacks Bull of the Day.
This Zacks Ranked #1 (Strong Buy) company provides human services and non-emergency transportation (NET) management services to children, adolescents, young adults, and families. The Company focuses on providing its social services in the client's home or in community-based settings. It provides its NET management services through local transportation providers. The company also provides human services, workforce development services (WD Services), and health assessment services (HA Services) in the United States and Canada. The company's services are reimbursed by government programs such as welfare, juvenile justice, Medicaid or corrections.
In their most recent quarter, Providence Services reported consolidated revenues of $508.3 million, up 47.8% y/y, gross margins of 11.5%, and has cash and cash equivalents of $145.2 million. Also, this was the fifth consecutive quarter where Providence Services met or beat both the Zacks Consensus Earnings and Revenue estimates. In fact, this company has an average positive earnings surprise of +74.4% over the past four quarters. According to James Lindstrom, CEO, “Our financial results in the second quarter benefited from strong volumes in HA Services, execution on operational improvement and organic growth initiatives in Human Services, and increased membership and new contracts in NET Services. In our WD Services segment, management remained focused on launching large, recently won contracts. Partially due to delayed start-up expenses and additional complementary revenue sources associated with these new contracts, the financial performance of WD Services exceeded our internal expectations for the second quarter.”
Increasing Estimates
As you can see from the table below, estimates for Q3 15, Q4 15, FY 15, and FY 16 have all increased over the past 30 days.
Specifically, Q3 15 improved from $0.11 to $0.22, Q4 15 rose from $0.19 to $0.29, FY 15 jumped up from $1.74 to $1.95, and FY 16 leaped up to $2.70 from $2.02.
Bottom Line
The non-emergency transportation business (NET) expecting top-line growth between 5-7% on average over the next three years, and the workforce development segment (WD) is expecting to see top-line growth between 4-7% over the next two years. This combined with the health risk assessment segment, which is expecting top-line growth between 7-9% over the next two years has Providence Service well positioned for long term growth.
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PROVIDENCE SVC (PRSC): Free Stock Analysis Report
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