ModivCare Inc.

Alison Ziegler - Cameron Associates Warren Rustand - Chief Executive Officer Bob Wilson - Chief Financial Officer Herman Schwarz - CEO of LogistiCare Craig Norris - CEO of Human Services Division

Bob Labick - CJS Securities Kevin Campbell - Avondale Partners Rick D'Auteuil - Columbia Management

Thanks Dave. Good morning, everyone, and thank you for joining us this morning for Providence's conference call and webcast to discuss financial results for the third quarter ended June 30, 2013.

The press release was issued yesterday after the market close. Before we begin, please note that we have arranged for a replay of this call, the replay will be available approximately one hour after the call's conclusion and will remain available until November 14th.

The replay number is 888-286-8010 with the passcode 49143112. This call is also being webcast live with a replay available.

To access the webcast go to www.provcorp.com and look under the Investor Information tab as well as the Event Calendar. Before we get started, I'd like to remind everyone of the Safe Harbor statement included in the press release and that the cautionary statements apply to today's conference call as well.

During the course of this call, the company may make projections or other forward-looking statements regarding future events or the company's beliefs about its financial results for 2013 and beyond. We wish to caution you that such statements are just predictions and involve risks and uncertainties, actual results may differ materially.

Factors which may affect actual results are detailed in the company's recent filings with the SEC, including the company's 10-K for the year ended December 31, 2012. The company's forward-looking statements are dynamic and subject to change.

Therefore, these statements speak only as of the date of this webcast, November 7, 2013. The company may choose from time-to-time to provide updates and if they do we’ll disseminate the updates to the investing public.

In addition to the financial results prepared in the accordance with generally accepted accounting principles or GAAP stated in the press release and provided throughout our call today, the company has also provided EBITDA and adjusted EBITDA non-GAAP measurements, which present its earnings on a pro forma basis. Providence’s management utilizes these non-GAAP measurements as means to measure overall operating performance and to better compare current operating results with other companies within its industry.

Both EBITDA and adjusted EBITDA are measurements not determined in accordance with or an alternative for generally accepted accounting principles and maybe different from pro forma measures used by some companies. A definition, calculation and reconciliation to the financial statements of each can be found in our press release.

The items included in the non-GAAP measures pertain to certain items that are considered to be material, so that exclusion of the items would in management’s belief enhance a readers ability to compare the results of the company’s business after excluding these item. I’d now like to turn the call over to Warren Rustand, Chief Executive Officer.

Go ahead, Warren.

Thank you, Alison, and good morning. After scripted remarks we will be available to take your question.

With us today on the call we have Bob Wilson, our CFO; Herman Schwarz, CEO, LogistiCare; and Craig Norris, CEO of newly rebranded Human Services Division. We believe that the term Human Services is better aligned with what we do beyond the narrow definition of social services and is reflected in our mix of business both today and where we could envision ourselves in the future given the evolution of healthcare systems.

You may have also noticed this rebranding on our website with our newly defined mission of creating healthier communities. Turning to the third quarter Providence continue to show solid results we reported revenues of nearly [$267.7] million, $845 million for the first nine months of the year.

As Herman will discuss in more detail NET revenue was pressured in the quarter by the transition [Technical Difficulty] from an at risk to an administrative services only or ASO contract, as well as our termination of Wisconsin and which was affective on August 1st, this was mostly offset by continued expansion in California membership growth in the New York City, Texas and Georgia and negotiated rate adjustments in selected programs. Despite the pressure we saw on the top line, we saw continued improvement in the NET gross margin both sequentially and year-over-year and solid growth on the bottom line.

In our Human Services segment revenue increased slightly year-over-year in the third quarter. Our census increased by just over 9% with gains seen generally across the board.

Well, I will hand Bob provide a more detailed review of our financials, we saw continued improvements in our consolidated operating margins [Technical Difficulty] our management team remains focused on driving organic and acquisitive growth and improving operating efficiencies through various internal efforts. We continue to believe this will help position us from emerging trends in healthcare such as coordinated and integrated care and continued outsourcing of transportation management.

While there is more clarity around which states will participate in Medicaid expansion with the 29 states plus the District of Columbia currently moving toward expansion, there are a still uncertainty at the state levels of how many and when? In our NET division, 11 of the states where we cover Medicaid lives are now participating in the expansion, New Jersey, being the most notable among them and our largest contract.

On the Human Services side, where we would expect to benefit more gradually from enrollment, Arizona and California are two of ten states and are the largest states that are participating with several other states anticipating to opt-in as well. Until the states were able to give us more clarity in projections, we will continue to be cautious about projecting the impact of this population on our business.

The favorable trends we see in healthcare today continue to be opportunities for Providence. We have enduring relationships with payers, clients and referral sources.

We have geographic reach, breadth of services and experience. We manage to find populations and provide our networks, we have demonstrated confidence in contract bidding, infrastructure and managed care contracting experience as well.

This should serve us well as we continue to position the company for the future. Let me now turn the call over to Bob Wilson, our CFO who will provide more detail on the third quarter results reported in our press release last night.

Thank you Warren. As we just mentioned revenues for the third quarter of 2013 was $276.7 million, a decrease of 1% from $280 million in the comparable period in 2012.

Craig and Herman will provide more details about these results in just a few moments. We did have net income of $3.5 million or $0.25 per diluted share in the third quarter compared to net income of $1.2 million or $0.09 per diluted share in the comparable period last year.

As we have discussed on previous earnings calls both of our business segments typically experienced softer operating results in the summer months of the third quarter. Human Services experiences lower client demand due to summer school closures and vacations and therefore lower revenues.

While NET revenue streams are relatively fixed it typically experiences higher demand for transportation services due to favorable weather during the third quarter and therefore higher costs. That said our consolidated operating margins showed improvement for this quarter compared to the third quarter of 2012, 2.9% this year compared to 2.7% last year, even excluding the impact of an impairment charge of $2.5 million taken in the third quarter of 2012.

EBITDA for the third quarter of 2013 was $11.2 million compared to $9 million in the same period last year. Adjusted EBITDA for the third quarter of ‘13 was $11.7 million compared to $11.5 million in the same period last year.

EBITDA for the first three quarters of 2013 was $43.2 million compared to $27.2 million in the same period last year. Adjusted EBITDA for the nine month period ended September 30, 2013 was $44.2 million compared to $30.3 million for the same period in 2012.

This represents a year-over-year increase of 46%. EBITDA margin increased to 4% in the third quarter of 2013 from 3.2% in the third quarter of 2012.

EBITDA margin also increased to 5.1% for the nine months ended September 30, 2013 from 3.3% for the nine months ended September 30, 2012. This represents progress towards achieving our stated goal overtime of achieving EBITDA margins in the 6.5% range.

We previously communicated to you that we expected our effective tax for 2013 would be in the range of 40% to 42%, however our actual effective tax rate for this quarter was 36.7% and 39.8% for the for the first nine months of a year. This is due primarily to the significant tax benefits realized from incentive stock options that were exercised during the quarter.

The increased incentive stock option activity is largely attributable to be positive movement in our share price. Notwithstanding future incentive stock option activity we would still expect our tax rate to be in the 40% to 42% range going forward for the full year.

This has compared by a point of reference with 49% in 2012. Where we land in that range of 40% to 42% really depends on largely the tax rates in which we operate in the states in which we operate and generate taxable income.

We continue to generate robust net cash flow from operations $45.7 million in the first nine months of the year, compared to the $39.9 million in the same period in 2012. At September 30, 2013 we had unrestricted cash and cash equivalents of $91.1 million compared to $74 million at June 30, 2013 and $55.9 million at the end of last year.

This strong cash flow from operations and combined with strong cash position coupled with the increased borrowing capacity of approximately $100 million that we put in place in connection with our debt refinancing during the quarter, significantly enhances our financial flexibility as we continue our set our sights on investments in growth opportunities, technology and other infrastructure improvements. Today we have not tapped into the credit facility for either operating or investment purposes.

I will not turn it over to Craig to discuss the performance of the Human Services business for the quarter.

Thank you, Bob. For the third quarter our client census on the Human Services side was approximately 56,000 clients, this is up approximately 5,000 clients from the prior year quarter.

All clients have been served from 353 local offices and 23 states, The District of Columbia and Canada. There are approximately 6,200 employees serving 473 contracts.

The contract count for the segment was down year-over-year for the quarter primarily driven by the funding changes and The No Child Left Behind Act. This is up and I have previously discussed on our calls.

Revenue increased slightly year-over-year in the third quarter primarily due to the new work force development contract in Wisconsin that started up in 2013 as well as improvements in other certain markets. While we did experienced areas of softness in the quarter mostly related to under performance in a few managed care markets as well as summer seasonality, we did however see census improvement of nearly 9.5% which represents census gains across most of our markets from the prior year quarter.

This help to offset reductions and the workforce development business in Canada and the expiration of contracts related to our tutoring program. Our Wisconsin contract is now fully implemented and has solid performance in the quarter.

We are also in discussion for next year’s contract and have an opportunity to improve our rates. As of September our Texas contract finally began transitioning over clients from the state system.

And the rollout is taking longer than expected and clients likely won’t be fully transferred until the end of Q1, 2014. This is the first of what will be numerous contracts in Texas and there are and have been numerous technical delays while we partner with the state to implement and operationalize certain aspects of the new system of care.

We will continue to diligently partner with the State of Texas so the system acceptably implement. As we move out of Q3 and into Q4, as I said on our last call, many of our markets are beginning to stabilize and then certain markets enrollment forecast resulting from Medicaid expansion are beginning to be discussed.

The pipeline is continuing to expand and we are waiting a number of opportunities. We recently closed on a very small but strategic tuck-in acquisition in North Carolina.

We will continue to diligently evaluate these potential opportunities and look to make additional strategic acquisitions in 2014, especially markets that are continuing to consolidate their provider systems. Now I’ll hand over to Herman for more details on LogistiCare.

Good morning, everyone. In last quarter’s call, I discuss how the transition of Connecticut to an ASO model and the loss of our Arkansas contract had negatively impacted revenue, but it is more than offset by the year-over-year growth in New York City, Texas and Georgia as well as in key managed care contracts.

While these positive growth factors continue to enter the third quarter and were not enough to overcome the additional upside on revenue and also terminating the Wisconsin contract as of August 1st. Resulting $192 million of revenue in the third quarter is a 2.2% decline to last year and a 3% decrease to this year's second quarter which also benefited from the retro payment from New Jersey.

During the third quarter, we did experienced positive revenue trends in both Missouri and Oklahoma, where we implemented new contracts that had higher rates going into effect on July 1st. Despite the revenue decline, our gross margin in the quarter continued to improve due to these rate increases and the growth in the New York City ASO contract.

Transportation expense in the third quarter was 76.7% of revenue, versus 79.9% last year during the quarter and also compared favorably to the 77.6% rate last quarter. Non-transportation expenses as a percent of revenue did increase slightly over last quarter as we increased our call center staffing to meet the more demanding performance requirements we're seeing in newer contracts.

We managed transportation in 43 states and the District of Columbia and have a census of 16.0 million eligible members, up from 14.8 million a year ago, but down from 17.2 million eligible last quarter, primarily due to the exit from Wisconsin. In RFP activity, North Carolina finally canceled its RFP process without moving forward.

However the Rhode Island opportunity has progressed. While there has been nothing announced publicly, we are expecting a positive outcome in that state.

And brand new processes, Texas released a draft RFP and invited comments from the potential bidders. The official RFP for the 10 regions are currently under the broker structure is expected to be released in the next few weeks.

Bidders will be required to submit proposals for each of the ten regions so this is quite a big undertaking. Also in late October West Virginia issued its long promised RFP for a state wide program.

We are already at work on this submission which has a fairly quick turnaround. In rebid state, so far we've had mixed results.

And good news it was recently announced that we are the winner of the RFP in Michigan and then a disappointing decision that we were notified of last night we were not selected as the bidder in Mississippi. We will obviously review this decision closely and consider a protest if appropriate.

And two other critical rebid states South Carolina and New Jersey, we know the agencies are hard at work taken the RFPs to be released over the next few months. We also have had very good success in securing new managed care contracts in Michigan where we have contracted to add over 500,000 new lives between now and the end of the first quarter of 2014.

In California we have two large MCO programs starting the course of the year which will expand our services into some of the more rural parts of the state. Our business development efforts in the managed care environment are extremely active right now.

While most of the dual-eligible pilot programs that offer services to beneficiaries with both Medicaid and Medicare coverage have been delayed later into 2014, we are in active discussions with many of the designated program managers regarding transportation benefit in these plans. We are also very active in Florida working with many of the designated winners in the transition to managed care for both the long-term care and regular Medicaid populations.

The structural change in that state threatens our present market share but also provides an opportunity to increase that share if we can secure more lives in the transition. I will now turn the call back over to Warren.

Herman thank you very much. Overall we're pleased with the progress the company has made in 2013.

And we remain committed to initiatives that we set forth at the beginning of this year primarily targeted at improving efficiencies. We continue to believe that the impact of Medicaid expansion under the Affordable Care Act will create opportunities for us to serve a substantially larger population of currently underserved citizens.

Beyond Medicaid expansion, general healthcare market trends, which include growing awareness of the need to coordinate physical and behavioral healthcare services and the importance of facilitated non-emergency access to preventative services will also provide opportunities. And with strong cash position coupled with increased financial capacity we are pursuing growth oriented added initiatives and investments to further position our business for the future.

And with those comments, we will open the call to questions.

Good morning. Thanks for taking my questions.

Can you hear me?

Yeah Bob, go ahead.

Hi great. Okay, thanks.

I’ll start with Craig on the human services side. If you could maybe elaborate a little bit more about the expenses in the quarter, I know there is seasonality in Q3 that we've obviously discussed in the past.

But typically cost of goods would also, cost of services will also come down a little bit whereas I think it was sequentially flat to maybe up a little bit. Does that have to do with ramping up of Texas or how should we think about the gross margin in the quarter on a go forward basis?

Yeah I mean I think since the Texas contract has been pushed back similar to some of the Herman’s contracts over the years, we had to continue to maintain our infrastructure so that probably pressured our expenses. On the school-based side we do get some leverage of expense, but a lot of those staff are still on the payroll so to the extent the school-based seasonality has a larger impact on us year-over-year as we expand our school-based programs we will see some of that impact on the expense as well.

On the gross margin I think that our expenses as we enter into Q4 the school-based revenue starting to have some of Texas revenue come in should sort of offset the expense differentiation you saw in Q3. So hopefully once we get back into Q4 with school started now, Texas is ramping up albeit slowly I think you will see some of that start to equal slope out.

Okay, great. And then obviously overall you guys have fantastic cash flow, Craig it sounds like they’re fine unless you make the tuck-in acquisition.

Could you tell us about the environment out there and what else might be of interest?

Yeah. The tuck-in was a very small it was strategic though it really goes to our merit of what we see in the environment.

As I said before on a behavioral health side, really is a consolidating environment, an environment where -- providers. And we are very much seeing that.

And I think our challenge is to make sure that when we do these tuck-ins when we look at some of the acquisitions out there that we are entering into good targets that are quality run operations and that’s part why it’s taken us a little bit longer because some of these consolidating environments to attrition I think you will see zero providers and could create organic opportunities for us. In summary, it will be target that we might want to acquire.

So I think we continue to see that in a lot of different states and we are tracking, Bob a number of different targets, but we are taking our time to make sure they are the right ones and there won’t be an organic opportunity to think of that business as a pool to acquiring it. And so I’m optimistic about continuing forward in that strategy and this one was just efforts of many hopefully that are more small strategic that’s happen to be a very by bilingual provider in one of the consolidating states we’re in.

So that kind of strategy I continue to see playing out on my side.

Okay, great. Thanks.

And then jumping over to the LogistiCare side obviously very strong margins there sequentially up which I guess you normally wouldn’t have been expected. Just want to get sense of were there any retroactive benefits in the quarter or was it a utilization, how do you see the strong margins in which we think our margin on a go forward basis?

There were no retro pick-ups during the quarter. So (inaudible) obviously in New Jersey have nothing that came through in the third quarter in that capacity.

And the real reason I think that you saw kind of the improvement in margins were certainly the rate increases that we took in Missouri and Oklahoma and obviously getting rid of Wisconsin help us well. Those combined with New York City as an ASO contract does quite a bit of good on our margins particularly as you look at gross margins, Bob because there is a transportation expense.

So with the growth in that contract with the final stages coming in at the beginning of the year and that having a bigger influence on our numbers that does tend to drive the gross margins.

Okay, great. Thanks.

And then you gave us a ton of information which was appreciated, could you maybe, I know you don't want to say anything specific contract, but maybe talk a little bit about the new bidding opportunities in aggregate and the size of the opportunities from the multiple states you discussed?

I mean here is what I'll target. Texas the two broker regions currently which are the one that we have in Dallas and the one that MTM manages in Houston are worth revenue wise somewhere in a neighbourhood of about $60 million to $65 million.

And these ten other regions that are coming out are the rest of the state. So we're not quite sure honestly, what the size is ourselves yet, but I think you can kind of use that as a guideline to try to get a sense of it, obviously Dallas and Houston are the major metropolitan areas in Texas.

So I would kind of balance it against that. But we would probably assume just from what we know that those 10 will probably work about the same is the two from a revenue perspective.

Okay.

West Virginia, I can tell you that publicly in their RFP which is a public document had indicated that their spend annually is $27 million.

Okay, great. That's helpful obviously.

And then you talked about kind of the rebids that are remaining and what you expect in terms of the competition there. And then actually even more so, can you talk about how will you handle rebids or how is it going to be handled in terms of the increased enrolment because it's almost like an entirely new contract on that regard, the rate for the newly eligible versus the existing?

Exactly. Well the truth of the matter is, we handle it however the state builds it into their RFP.

So in the case of Texas they’re not expanding, so it shouldn’t have an impact. And I don’t know about West Virginia or Kansas I just simply know since we're not doing business there yet I am not sure that I can’t recall what they did in their RFP, Bob.

But I can tell you that in Michigan which was an expansion state that we mentioned that we just re-won, they ignored their expansion population in their RFP. They said, they weren’t going to account for it at this point and they were going to only use the population that they currently knew about.

I can tell you from and I know this is something that you've been interested in for a while, I can tell you that while it is as frustrating to you it is just as frustrating to us that it is very difficult to put our hands around what impact expansion is going to have. I was with New Jersey, the Secretary of Health last week and was talking to her about expansion and asked her what we could expect, as we mentioned earlier New Jersey is an expansion state and we have that contract and her answer was come talk to me in March we’ll know then.

They've got a very wide range and they are really not sure where it’s going to come from and frankly could give us a very little guidance. So in these RFPs I think the path that most of these states are taking is they’re ignoring it and saying no deal when it happens.

Okay, great. Thanks for all the color.

I'll hop back in queue.

Bob I asked the Secretary if she would come on this analyst call and explain that to you so that you would actually believe what I am saying to you.

Don’t worry, I believe you. It’s unfortunate with the answer, but I believe you.

And I was in Nevada earlier this week and got a similar answer. They have an estimate, but they said, but we really don’t know and won’t know until it’s over because people are just unclear where it’s coming from.

And Bob this is Warren that's why you can understand both the human services side and the NHE side we’re being very cautious until we get much better visibility and insight into where this is going and maybe several more months yet before this is all settled. So we are not building that into our budget, we’re not building that into our projections.

Right. Fair enough.

That's a good thing, but you can’t treat it right now, so okay. Thank you very much.

Thank you.

Good morning. Thanks for taking my questions.

I wanted to start with the Mississippi contract, if you could give us some general sense as to the overall impact on revenues and whether or not the margins there are roughly in line with margins for LogistiCare as a whole or they are better or worse et cetera so we can try and figure out the potential impact to earnings?

Sure Kevin. Mississippi, as we look at 2014, first of all let me just say, we’re certainly not in a position yet to say that that's absolutely gone.

We’re going to look at that and as you know we've been successful in the past when we have protested and if there is an opportunity we’d certainly going to protest in Mississippi. That being said, our current contract last until the end of June, next year 2014.

So we get a half year benefit of Mississippi. The contract is worth about $34 million, $35 million.

So I half the year in terms of modelling for next year would be we’ll get $17 million of revenue into next year or lose $17 million out of the run rate this year. And from a margin standpoint, Mississippi is slightly above what we would consider to be an average contract.

It’s a good contract, but it’s replaceable if we have to do it.

Yeah. Can you guys just remind me historically to kind of put that average EBITDA margin for LogistiCare in 6.5% sort of range?

Yeah between 6% and 6.5% is kind of our average rate.

Okay, great. And Herman maybe you could talk about what’s left to be rebid, I know New Jersey is certainly one forget the other one South Carolina.

But can you give us a sense not just sort of the aggregate revenues combined of the rebids for 2014?

Well when you are really looking what’s left now is South Carolina and New Jersey which would be about $160 million, $165 million.

Okay, with most of that being in New Jersey?

Most of that being in New Jersey, correct.

Okay, great. Craig maybe you could talk about the human services revenue.

So you had obviously strong growth and your census being up 9%, but the revenues were only up about 1%. So why didn’t the revenues grow more, was that just sort of timing in terms of when the census grew it was all at the end of the quarter and therefore didn’t have as much of an impact for the fourth quarter?

Yeah it’s a good intuitive question, Kevin. We of course track our census count at the end of the quarter so that would have been heavily weighted obviously towards the end of September.

So I would expect that, census is a directional metric. There are environments, for example some of our capita environments like Arizona where increase in census is not a one-to-one relationship to revenue per se, but at all of our markets it is a directional indicator.

So that would become more at the end of the quarter Kevin, so I think it’s a good question and my hope is that, what we are seeing is sort of a leading indicator in some of these states, the census increase was across many markets not just in one market, but as we counted that census it was at the end of the quarter, so you probably want to saw any of that been at the furthermost parts in Q3.

Okay. And then getting back to the expenses as a percentage of the Human Services revenue, it was up pretty significantly sequentially and even year-over-year.

And I am sure there are some startup costs related to taxes there, but is there anything else that has caused that big increase? And a year from now, I know Texas is still sort of rolling out and so you could see some headwinds for a quarter or two, but a year from now should we expect margins to or expenses there to return back to mid-80s, mid to upper 80s where they were 2012 let’s say?

Yeah, I think the other thing impacting expenses really is probably the Wisconsin startup. That started up, it was in startup mode for first six, seven months of the year and now we’ve kind of rolling into that implementation.

So that along with Texas, I think you are seeing the impact of expenses in those areas. And then we have a couple managed care states that are as I said still revolving some of our performance in those areas that probably impacted expenses as we ramp up quality assurance and programs that kind of keep us current with some of the expectations in these new managed care states, but the big increase in expenses comes from Texas and Wisconsin.

And again, you said Wisconsin at this point is kind of fully ramped and Texas would probably be Q1 of next year, end of Q1 of next year?

That's a conservative estimate, I mean we're working with the state, it's been a very arduous process to move clients out of their systems into ours. It's their first one, so I think that we're both kind of taken our time to try to get this done right, they are going to be many bids in Texas.

I think getting this first one right both from a technical, practical perspective on how you move clients in and out of the state systems into our system, it has taken some time. So we're estimating at the end of the quarter one of 2014, we'll have our population of what they call the legacy clients transition into our system.

I think it's a conservative estimate Kevin, but given the delays I want to keep that kind of conservatism.

Yeah.

Kevin, this is Warren. Thinking about Texas also, the second RFP, this is the one we're working at now, the first RFP.

And so it’s really a trial project and we're working very closely with states to make sure it's implemented correctly. We have chosen not to bid on the second RFP so that we can do this one right and the state sees benefit in that and really appreciates that.

The third RFP is coming out very shortly and we will be bidding on that, there will be subsequent RFPs beyond that. So we see the state of Texas has a very important place for us to do business and we're going to work very diligently at these RFPs and extend ourselves for those RFPs as they come out over the next few months.

Can you give us a sense of the magnitude of the opportunity in Texas from RFP 3 and beyond? Is it $100 million in revenue, is it $500 million or is it 20?

That’s a good question. I mean our current contract at full maturity and we're in one of pretty rural area there Kevin this is $28 million, $30 million so it’s a multi $100 million type of opportunity if all the regions come out, kind of like on the logistic care side.

They started with the pilot in two regions and now they’re moving forward in the rest of the regions I believe. So they take on the similar track to that, you’re talking pretty big numbers in the couple of $100 million level probably or more.

Warren, could you talk about the technology rollout, I know you guys were kind of assessing what you were going to do on the technology front last quarter and for maybe reaching a decision there so can you help us there?

We would have the total of six vendors. We had a technical committee across section from across the United States multi-disciplined group from within the company that evaluated those scores of hours and diligence and scoring everything.

In fact, we've narrowed that down to two platforms. Those two platforms are currently operating within our system.

We will continue to roll out those two platforms. We think those have tremendous opportunities.

One is primarily in the west, one is primarily in the east and we think that they provide significant opportunities for efficiencies and organizational gain. So we're anxious now to having gone through that process to now expand those two platforms.

It’s conceivable that over a period of three to five years of that we might have a winner between those two or eight dominant platform but right now each of those two platforms is doing very well for us and we continue to see where we can add to that and invest in it. So over the next five years we expect to make strong investments in our technology which will give us competitive advantage for the future.

So we've narrowed it from six providers, analyze those, we down the two, we like those two, we've had experience with those two, our people are familiar with them and we continue to move forward to utilize that for productivity gain.

And do you guys still feel pretty comfortable about the 6.5% EBITDA margin is achievable and what sort of the timeframe for that, is it 18 months, is it three years?

We wouldn’t be able to give you an exact timeframe, but we absolutely believe it’s achievable. We’re going to continue to push hard to get there.

As you’ve seen for the first nine months of this year, we've seen a nice improvement in EBITDA margin. We’re going to continue to focus on that.

We believe that's a way to create value for our shareholders is to drive margin. So clearly there is a focus on that as you’ve seen and we expect that to continue.

I wouldn’t be able to give you an exact timeframe, but clearly we would like to get those sooner rather later, then we recognize even in spite of our goal, both on the Human Services side and NET side. The environments are tightening up, getting tougher, but harder to produce that.

So we've got to be even better operators going forward, but we’re not going to back away from that goal.

Is there any reason why over the long term you don’t think you get back to sort of the 8% type of EBITDA range, where you were in ‘09 and 2010?

It remain to be seen if we can get there. We wanted to get to the 6.5% first and once we get there we’ll set our sights higher obviously, but clearly we would like to get back to historical levels.

There is no doubt about that Kevin, and we’ll do everything possible to do that.

Okay, great. One last question for Bob.

The G&A came down in the quarter was only $11 million, is that a good run rate to use going forward or is there some reason why 3Qs unusually low and it might pick back up in out periods?

Sure. Well, I think it’s a little low in the quarter.

I think if you look at our year-to-date, we are running G&A at about 4.3% of revenue, that or slightly below that is probably a little better target. There were a couple of things that hit the third quarter that caused it to be at 4% rather than a little higher than that.

As we’ve talked about in prior calls I believe, we are virtually stepping away from being in the management services business and some of that exit of those contracts took place at the end of Q2 or early Q3. The way the economics work on those all the revenues sits up at the revenue line of course, but all of those, all the costs associated with those contracts sits in G&A.

So as those contracts fuel away the costs go down probably disproportionate, probably to the revenue because of the margins involved in that business. So I think if you look at year-to-date at 4.3% that’s a pretty good run rate I believe currently.

Okay, great. Thank you very much.

I think I was little slow on the trigger. All my questions have been asked and answered.

Thank you.

Thank you very much.

So hearing no more questions, we would like to say thank you for joining us. We appreciate your interest in our company and we stand ready enable to answer your questions between these calls as we can and we look forward to updating you in the fourth quarter after the first of the year.

So thank you very much for your time.