Res-Care, Inc. Q1 2008 Earnings Call Transcript

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2008-05-08 11:30:11.0

Tags: Res-Care Inc.

Question-and-Answer Session

Operator

Are we ready for questions, sir?

David Miles

Yes, please open the call for questions.

Operator

Thank you very much. (Operator instructions) Our first question is coming from the line of Kevin Ellich from RBC Capital Markets. You may go ahead, sir.

Kevin EllichRBC Capital Markets

Good morning, guys. Thanks for taking the questions. I guess it looks like you are making a headway in the home care and home health businesses. Can you talk about those businesses that you acquired in the first quarter, and any characteristics that you are willing to provide? And also what the pipeline for the home care segment looks like for the remainder of the year?

Ralph Gronefeld

Yeah, Kevin, this is Ralph. The characteristics of the acquisitions in the first quarter for our home care and especially in April mirror what we have been doing historically. Select Health Care does have a piece of it that's Medicare, which is not necessarily unusual, per se. We have got some of our other operations that have some Medicare piece, but it's only approximately 30% of the total business, and that's the comfort level that we are okay with.

As far as the pipeline, the pipeline continues to be strong in health care – home care, I am sorry, at approximately 80% of the total acquisition pipeline that we currently have.

Kevin EllichRBC Capital Markets

Okay. And then have you guys provided any guidance in the past about how much you think home care will contribute to 2008 revenues or operating income?

Ralph Gronefeld

Well, historically, we have talked about that. Currently, our run rate is about $300 million in home care. We anticipate growing that business in the high-single digit, low-double digit rate, combined, both organically and through acquisitions.

Kevin EllichRBC Capital Markets

Excellent. That's helpful. And then, also the international operations, I was wondering if we could get any update on how the integration process is going, if it's – work is completed. And also, what's your thoughts are on expanding the international business?

Ralph Gronefeld

Sure, Kevin. The international integration is progressing, it is moving forward. It's not complete. We still have some challenges and opportunities to get it fully integrated, but we are working through those. We did see improvement month over month during the first quarter as we integrated the operations. We want to make sure that we do get them integrated, we do have them operating, as they should, before we look at future growth, but our goal is to grow. This has established our platform in the European Union for growth in Workforce Services, and we anticipate doing that through the course of the year, both by looking at additional acquisitions and looking at new do contract awards.

 

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