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Paychex reports growth in PEO workers, clients and health boost

September 24, 2014

Paychex Inc. (NASD: PAYX) reported growth in PEO and ASO worksite employees and clients and reported a new minimum premium plan healthcare option for PEO clients helped boost revenue in its fiscal first quarter ended Aug. 31.

“The increase from the new PEO health care offering represents approximately 2.5 percent of total service revenue for the first quarter,” CFO Efrain Rivera said in a conference call with analysts. “Just so you hear that again, increase from the new PEO health care offering represents approximately 2.5 percent of total service revenue for the first quarter.”

Total revenue rose 9 percent in the first quarter to $666.8 million at the Rochester, N.Y.-based firm.

Paychex’s includes its PEO and ASO, or administrative service organization (similar to PEO but without co-employment), revenue in its human resource service segment. PEO and ASO represent a fraction of the segment’s revenue which rose 17 percent in the first quarter to $243.8 million.

The company’s largest segment is payroll services where revenue rose 4 percent to $412.8 million.

First-quarter net income rose 5 percent to $171.3 million.

Paychex shares rose 3.16 percent in early afternoon trading to $43.79 and the company had a market cap of $15.91 billion, according to Yahoo!