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GEO expands in other states, mental health market but loses two TDCJ contracts

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The GEO Group held its 3rd quarter earnings call this morning.  You can read the company's press release here. On the call, GEO CEO George Zoley, Chief Operating Officer Wayne Calabrese, and Chief Financial Officer Brian Evans lead investors through quarterly earnings and analyzed GEO's three major business areas: US Corrections, GEO Care, and International Services.  The company's overall revenues for the quarter were nearly $328 million, up from $294 million a year ago. $217 million of that earnings came from U.S. Corrections, $60 million from GEO Care, and $47 million coming from International Operations.

U.S. Corrections

Zoley was generally optimistic about the quarter, announcing an increased outlook for 4th quarter and the full integration of Cornell facilities after GEO's buy-out of that company earlier this year.  Major developments/expansions for the company included the announced award of a 2,800 Federal Bureau of Prisons contract to the D. Ray James facility in Georgia, and a Florida contract to develop the 2,000 bed Blackwater prison in Florida.  Zoley also announced that the company is "actively pursuing a number of new organic opportunities." Investors congratulated the company on yesterday's news that California will move 2,580 prisoners to GEO facilities to its Baldwin, Michigan facility that was previously shuttered after reports of abuse against youth prisoners.

GEO's Texas' Operations

In Texas news, the company announced the loss of TDCJ contracts for the Bridgeport Correctional Center (which we reported in June) as well as the previously unreported loss of South Texas Intermediate Transfer Facility, apparently to MTC. This marks at least the sixth GEO facility to either be closed or re-contracted to another company in Texas in recent years.

The company anticipates the opening of its Montgomery County GEO Care facility in March 2011 pursuant to an agreement by state and Montgomery County.  Last year, we reported that the earmark for the facility raised many eyebrows.  As Emily Ramshaw, then at the Dallas Morning News and now with the Texas Tribune, reported ("Troubled prison firm's deal for new psychiatric hospital raises questions," July 11, 2009):

Lawmakers inserted an earmark into the state budget to fund the future Montgomery County facility starting in 2011. But they said they didn't know until this week that the county had selected the GEO Group to operate it, although GEO lobbyists were pushing for it as early as February.

The new facility came as a post-session shock to mental health advocates, who acknowledge the need for it. But they say they weren't informed about it and never would have signed off if they knew Florida-based GEO was operating it.

"Why would we want to use an entity that hasn't had a stellar reputation?" asked Monica Thyssen, children's mental health policy specialist with Advocacy Inc. "If the process had been more transparent, there probably would have been other state officials who would've said, 'I don't know if GEO is the best use of state dollars."

GEO officials, who run more than 50 facilities in the United States, including five mental health facilities in Florida, declined to comment, saying in an e-mail that they don't discuss "specific business development efforts and/or contracts."

We'll keep you posted on GEO developments from Montgomery County and elsewhere here in Texas. 

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