Scottsdale-based Rural/ Metro Corp. announced a 6.8 percent increase in revenue, but a $4 million net loss for the third quarter of its fiscal year 2006.
“We continue to achieve steady revenue growth as we seek to expand our presence in existing markets, win new contracts in attractive areas with strong demographic trends and achieve rate increases where applicable to meet the rising costs to provide highquality medical transportation services,” said Jack Brucker, president and CEO.
For the quarter ending March 31, Rural/Metro reported $137.9 million in revenue, compared to $129.1 million for the same quarter in the previous fiscal year. Revenue from medical transportation and related services increased 6.9 percent, compared to the same period in fiscal 2005.
Revenue from fire and other services grew by 6.6 percent, compared to the same period in fiscal 2005.
For the quarter, the Rural/ Metro reported a $4 million loss — including a $4.6 million loss from discontinued operations — compared with a $3 million loss for the same quarter in its fiscal 2006.
The third-quarter results were negatively affected by a $4.8 million pre-tax loss related to its third-quarter exit from the New Jersey medical transportation market.
“Our operation there was primarily nonemergency transports and did not include a significant contract of size to provide exclusive medical transportation services,” Brucker said. “Our preferred model includes a significant 911 contract for exclusive emergency ambulance services upon which we can build our nonemergency business.”
The financial results also were negatively affected by a $2.5 million pre-tax charge related to an ongoing federal government investigation of discontinued operations in Texas from 1993 to 2002. The investigation centers on discounts the company provided to healthcare facilities and whether they violated the federal Anti-Kickback Statute.
The $2.5 million charge should cover any potential losses related to this issue, Brucker said.
“We are currently limited in what we can say concerning this matter,” he said. “We are currently engaged in settlement negotiations and we believe we are adequately reserved at this time for any potential losses.”
Also during the quarter, Rural/Metro experienced a lengthening of the payment cycle from Arizona’s Medicaid program because of a change in that agency’s claims processing procedures at the beginning of the year.
“Arizona is our largest state of operations and Medicaid is a significant payer for us,” Brucker said. “They have assured us they’re making progress on this computer changeover and this will be temporary in nature.”
As for its debt, the company made a $5 million unscheduled principal payment on a loan, and its longterm debt totaled $294.5 million as of March 31.