The Providence Service Corp. has a market cap of $236.5 million; its shares were traded at around $17.93 with a P/E ratio of 9.8 and P/S ratio of 0.3. PRSC is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:Management fees. Revenue for entities we manage but do not consolidate for financial reporting purposes (managed entity revenue) remained relatively consistent at $52.6 million for Q3 2010 as compared to $52.4 million for Q3 2009. The decrease in management fees for Q3 2010 as compared to Q3 2009 was primarily attributable to one of our managed entities disposing of assets resulting in less revenue earned by the entity. Our management fees are based on the managed entitys revenue and resulted in a decrease in our management fees.
Other operating expenses. For Q3 2010, other operating expenses increased over Q3 2009. This increase was primarily due to an increase in expenses of approximately $1.4 million resulting from the reclassification of expenses related to activities of one of our captive insurance subsidiaries from general and administrative expense to client service expense in 2010. This increase was partially offset by a decrease in bad debt expense of approximately $940,000. As a percentage of revenue, excluding NET Services revenue, other operating expenses increased from 14.4% for Q3 2009 to 15.5% for Q3 2010.
Stock-based compensation. Stock-based compensation of approximately $108,000 and $110,000 for Q3 2009 and Q3 2010, respectively, represents the amortization of the fair value of stock options awarded to key employees since January 1, 2009 under our 2006 Long-Term Incentive Plan, or 2006 Plan.
Interest expense. Our current and long-term debt obligations have decreased to approximately $185.9 million at September 30, 2010 from $227.0 million at September 30, 2009, which was a significant factor contributing to the decrease in our interest expense for Q3 2010 as compared to Q3 2009. Additionally, the changes related to our interest rate swap that occurred in March 2010 had a positive impact on interest expense.
Interest income. Interest income for Q3 2009 and Q3 2010 was approximately $97,000 and $62,000, respectively, and resulted primarily from interest earned on interest bearing bank and money market accounts.
Our effective tax rate from continuing operations for Q3 2009 was 3.9%. For Q3 2009, our effective tax rate was lower than the United States federal statutory rate of 35.0% due primarily to total tax benefits of $1.4 million recognized during Q3 2009 related to the true-up of our tax provision from the filing of our 2008 United States federal and state tax returns, partially offset by state income taxes, net of federal benefit and other non-deductible expenses. The $1.4 million true up was primarily attributable to a change in our blended state tax rate, a deduction for state taxes on the federal return, and a true up of state net operating losses.
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