The Virginia Department of Corrections has awarded Corizon a two-year contract, with five optional one-year extensions, the Brentwood-based provider of correctional facility health care announced Monday. Financial terms of the deal were not disclosed.
“Our staff on the ground provided outstanding service when we last worked with the Virginia DOC from 2006 to 2011, and that went a long way in allowing us this new opportunity,” Stuart Campbell, Corizon president and chief operating officer, said in a release.
The new contract will begin May 1, with Corizon to provide medical, mental health, pharmacy and support services to approximately 15,000 inmates across the Virginia penal system.
A Texas Senate committee this week voted to let a prison management contract with Corrections Corp. of America expire when it comes up for renewal this summer. If fully approved, the move would empty the 2,100-bed Mineral Wells Pre-Parole Transfer Facility west of Dallas, which Nashville-based CCA has owned and managed since 1995. The company's contract with the state includes two renewal options for two years each. Shares of CCA (Ticker: CXW) are up slightly to almost $38 in Wednesday afternoon trading. Year to date, they're up 7 percent.
The Tennessee Court of Appeals has ruled that Corrections Corp. of America must turn over settlement agreements and reports stemming from litigation, two categories of documents the company had argued do not meet the standard definition of public records. The ruling stems from a suit filed years ago by Prison Legal News Managing Editor Alex Friedmann. In late 2011, Chancellor Claudia Bonnyman ordered CCA to turn over the settlement-related documents, saying the company is the functional equivalent of a government agency. Late last week, Appeals Court Judge Frank Clement concurred, saying "the evidence preponderates in favor of the finding that the settlement reports at issue were prepared in the regular course of business." View the full opinion here.
SEE ALSO: Prison Legal News' release on the latest ruling
Corrections Corp. of America has declared its first quarterly dividend since converting to a real estate investment trust. Shareholders as of April 3 will get 53 cents per share — up from the 20 cents pre-REIT — later that month. Based on this morning's trading, that dividend will give CCA shares (Ticker: CXW) a yield of about 5.7 percent.
The equity index builders at MSCI have made Corrections Corp. of America the 119th member of their US REIT Index (Ticker: RMZ). The move is a little unusual because Nashville-based CCA isn't actually a REIT yet and hasn't yet paid out its accumulated earnings and profits dividend, which is expected to top $650 million.
On a very unrelated note, the company has decided not to bid on a large potential job in Brazil because the margins would be too low.
Avondale Partners Managing Director Kevin Campbell has lifted his price target for two of the local companies he follows. He now sees HCA Holdings (Ticker: HCA) climbing to $46 instead of $38, which amounts to eight times his pre-tax earnings forecast. But he says his outlook for better volumes is offset by cuts to several types of reimbursements and the looming threat of sequestration, while the "2014 headwinds are real." (Dave Shove at BMO said the same earlier this week.)
[W]e are lowering 13E and 14E EPS to $3.02 (was $3.16) and $3.18 (was $3.54), respectively. Although our estimates are below consensus (particularly in 2014), we believe shares should be supported over the long term by a multi-year tailwind of improving patient mix from reform.
Campbell also has raised his price target for shares of Corrections Corp. of America following the prison operator's news that it's going ahead with its conversion to a real estate investment trust. He sees little chance of the company (Ticker: CXW) missing its profit forecast this year and expects a boost to its shares if/when it is added to two prominent REIT stock indices. His new target is $43, up from $39, which leaves about 14 percent of upside.