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Crawford profit soars despite lower revenue

Crawford profit soars despite lower revenue

Crawford & Co.'s profits boomed despite a revenue drop in the first quarter of 2016 due partly to the expected decline in the company's Garden City Group L.L.C. segment, the Atlanta-based claims management solutions provider said Monday.

For the first quarter ended March 31, Crawford reported revenues of $290.9 million, down 5.1% from the first quarter of 2015, according to a statement.

The company also reported net income of $8.6 million, up 163% the same period last year, according to a statement.

“We are very pleased with our first quarter results as our expense reduction plan drove strong margin expansion and earnings growth despite lower revenues from the expected decline in our Garden City Group segment as well as foreign exchange headwinds due to a stronger dollar,” Crawford's interim CEO Harsha V. Agadi said in the statement.

Legal administration services provider Garden City Group's 33.1% decrease in revenues to $25.0 million “was primarily due to declines in volumes associated with certain large ongoing cases,” the statement says.

Crawford last month named Kenneth A. Cutshaw president and CEO of Garden City Group. As the interim president and CEO since January, Mr. Cutshaw’s “extensive leadership and experience … has proven invaluable and opened many opportunities for business,” Mr. Agadi said during a Monday conference call with analysts. He added that Garden City Group is “positioned to return to growth in 2017.”

Crawford's third-party administration unit Broadspire Services Inc., which handles workers compensation and liability claims, reported $76.2 million in first quarter revenues before reimbursements, up 9.3% from the first quarter of 2015.

The positive results are due to increased medical management services referrals and higher average case values, according to the statement.

Broadspire CEO Danielle Lisenby “is not holding back, and maximizing cross-selling opportunities,” Mr. Agadi said during the call. “You should see more lift coming out of Broadspire over time.

“While our overall first quarter results show a significant improvement, we are not yet where we need to be,” Mr. Agadi said in the statement. “The management team and I are focused on instilling a culture of growth within the company and are excited with the cross selling initiatives that are beginning to take place … We remain focused on transforming Crawford into a business with more predictable financial results and growth regardless of the market backdrop.”

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