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 NEW CASTLE, Del., Oct. 26 /PRNewswire/ -- America Service Group Inc. (NASDAQ-NMS: ASGR) reported today that net income in the third quarter ended Sept. 30 was $37,000 or $.01 per share of common stock, compared with $264,000 or $.08 in the same 1992 period.
 Revenues in the third quarter were $29,432,000 vs. $19,006,000 in the comparable 1992 period.
 Net income through nine months of 1993 was $542,000 or $.16 per share on revenues of $80,072,000, compared with net income of $1,272,000 or $.35 per share on revenues of $55,969,000 in the first nine months of 1992.
 ASG manages health care programs for inmates of prisons and jails under contracts from state and local governments and provides health care services for military personnel and their beneficiaries at federal hospitals and company-owned primary care centers.
 "The decline in earnings in the third quarter is mainly the result of intense industry-wide competition on bid pricing, additional costs due to higher pricing from outside medical providers, and some start-up costs involving new contracts and bringing the company's recently established in-house pharmacy supply operation on stream," said Jeffrey A. Reasons, ASG president and chief executive officer.
 Reasons said the company has launched a broad effort to reduce its cost structure. "These squeezes on profits, which we expect to continue, are bringing about a vigorous effort on our part to control costs as we manage our changing contract base to maintain and strengthen our margins," Reasons said.
 He cited a number of programs now under way, which include: writing new and better arrangements with outside medical providers to deliver efficient health care, capping outside costs, rolling out the company's pharmacy resource to cover more inmates, further computerization of internal operations to improve administrative efficiency, and adjustments to control compensation and benefits levels.
 Reasons said the company's revenue base for 1993 will continue to grow at better than 30 percent, consistent with results of recent years, surpassing $100 million. New contracts to date in 1993 include the City of Philadelphia, State of Maryland, a state facility in Pittsburgh, and smaller correctional facilities in Illinois, Florida and Georgia, according to Reasons.
 The company also expects to utilize its experience in organized health care management to play a bigger role in carrying out the new national initiative being planned. "We not only see opportunity from this initiative, we are preparing to pursue business with the key providers of these services," Reasons said.
 Consolidated Statement of Operations
 Quarter ended Sept. 30 1993 1992
 Revenue $29,432,115 $19,005,921
 Health care expenses 26,894,134 16,628,454
 Gross profit 2,537,981 2,377,467
 Selling, general and
 administrative expenses 2,579,594 2,127,854
 Income from operations (41,613) 249,613
 Other income (expense):
 Interest income 102,422 177,417
 Interest expense (1,346) (1,395)
 Other expense --- ---
 Total other income 101,076 176,022
 Income before taxes 59,463 425,635
 Provision for income taxes 22,000 161,741
 Net income 37,463 263,894
 Earnings per common and
 common equivalent share $.01 $.08
 Common and common equivalent
 shares outstanding 3,231,524 3,446,609
 Nine months ended Sept. 30 1993 1992
 Revenue $80,071,712 $55,968,887
 Health care expenses 71,939,194 47,861,291
 Gross profit 8,132,518 8,107,596
 Selling, general and
 administrative expenses 7,624,294 6,598,172
 Income from operations 508,224 1,509,424
 Other income (expense):
 Interest income 327,595 548,318
 Interest expense (7,289) (6,833)
 Other expense 44,120 ---
 Total other income 364,426 541,485
 Income before taxes 872,650 2,050,909
 Provision for income taxes 331,000 779,345
 Net income 541,650 1,271,564
 Earnings per common and
 common equivalent share $.16 $.35
 Common and common equivalent
 shares outstanding 3,280,892 3,682,615
 -0- 10/26/93
 /CONTACT: Jeffrey A. Reasons, president and CEO, of America Service Group, 302-888-0200, ext. 118/

CO: America Service Group Inc. ST: Delaware, Pennsylvania, Maryland IN: HEA SU: ERN

MK-LJ -- PH005 -- 6789 10/26/93 10:02 EDT
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Publication:PR Newswire
Date:Oct 26, 1993

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