America Service Group shares rise 15%; conference call notes

America Service Group Inc. (ASGR) shares jumped 15% this morning to their highest price in 15 months after the release of strong

America Service Group Inc. (ASGR) shares jumped 15% this morning to their highest price in 15 months after the release of strong third quarter results. Analysts praised the prison health provider’s results in a conference call held earlier this morning. The Brentwood company reiterated its cautious, deliberate approach to business.

America Service earned $2.3 million, compared to a $996,000 loss in last year’s third quarter. Revenue was up to $141.4 million from $140.1 million. The amount of revenue eaten up by health care expenses was slightly down from last year’s $133.1 million to $132.9 million for the quarter. That made for a 6 percent gross margin, slightly better than the 5 percent last year, but still off from the 9 – 10 percent margins the company posted prior to its financial slump last year. Chief Financial Officer Michael Taylor told analysts today that the company is moving toward that direction and expressed confidence in achieving those numbers once again.

EBITDA (a commonly used measure of operating cash flow based on earnings before interest, taxes, depreciation and amortization) for the quarter was $5.1 million compared to $2.8 million in the prior year period.

America Service reduced its debt by $3.1 million in the quarter and announced a commitment of $60 million of debt from CapitalSource Finance LLC. About $55 million of that is a revolving line of credit, while the remaining $5 million is a term loan. Each has a three-year term. Taylor told analysts the company would save $250,000 a year in interest due to the new agreement.

The company also told analysts it was developing a new line of business to provide medical management and case management to correctional facilities. The company has issued one contract for that service. “We think there’s an opportunity for us to take that service to people who may not be ready for a full sub contract of care, but they want focused consistence with their existing medical management program,” a company official said in the call.

America Service Group shares were up $1.80, or 15 percent near midday, at $13.80. Their 52-week low is $2.19.