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Gevity Provides Update on 2006 Guidance and Multi-Layer Growth Strategy.

Article Excerpt
BRADENTON, Fla., Sept. 18 /PRNewswire-FirstCall/ -- Gevity , the leading provider of a comprehensive insourced employment management solution, announced today an update to its 2006 guidance.

At the beginning of 2006, Gevity embarked on a 'multi-layer' growth strategy consisting of a multitude of parallel efforts designed to generate a greater percentage of profits from professional service fees while simultaneously accelerating growth in the number of client employees served. As the year progresses, not all of these efforts are contributing to the company's targeted performance acceleration at planned levels. Although growth rates in revenues and adjusted net earnings are anticipated to increase above previous year's levels and the fee component of gross profit is significantly improving, the company believes it is prudent to provide an update to its guidance for the remainder of 2006.

Of the individual components of the multi-layer growth strategy, two in particular have not yet yielded the desired results: the introduction of health carrier choice and the expansion of the mid-market portfolio, which, in both cases translates into a lower than anticipated growth in the number of client employees served at this stage of the strategy implementation. In contrast, the strategic components aimed at achieving risk neutrality combined with the associated improvement in the quality of gross profit, have yielded the planned results to date. As such, the company believes that the update of its 2006 guidance reflects a timing issue and remains committed to its previously communicated long-term performance standards for 2007 through 2010.

"While we have made significant progress in increasing the quality of earnings and at the same time, growth in revenues and adjusted income have accelerated above previous year's levels, not all aspects of our multi-layer growth strategy are contributing as planned yet," commented Erik Vonk, Gevity's Chairman and Chief Executive Officer. "We believe that the delay in further growth acceleration is temporary and can primarily be attributed to two initial challenges. The first is in reference to the pricing aspect of our new multi-carrier health benefit choice program; the second is a longer than anticipated sales cycle in the mid-market."

Mr. Vonk concluded, "The updated guidance we have provided today does not in...

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