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8-K - FORM 8-K - ModivCare Incprsc20160310_8k.htm

Exhibit 99.1

 

 

 

Providence Service Corporation Reports Fourth Quarter and Fiscal Year 2015 Results

 

 

Fourth quarter and fiscal year revenue of $424.9 million and $1.7 billion, respectively

 

Fourth quarter and fiscal year Adjusted EBITDA (non-GAAP) of $21.9 million and $103.5 million, respectively

 

Completed divestiture of Human Services for $230.7 million, using proceeds to pay down debt and repurchase shares

 

Repurchased 1.3 million shares for $53.6 million (Oct 2015 through March 10, 2016)

 

 

TUCSON, ARIZONA March 10, 2016 – The Providence Service Corporation (Nasdaq: PRSC), a holding company whose subsidiaries provide critical healthcare and workforce development services, today reported financial results for the fourth quarter and year ended December 31, 2015.

 

James Lindstrom, Chief Executive Officer, stated, “In 2015, Providence achieved many strategic milestones, refining our strategy from having four separate verticals to pursuing market leadership on two fronts – US Healthcare Services and Global Workforce Development. Our solid foundation positions us well to realize many of our previously expressed goals in 2016 and to drive enhanced growth and value.”

 

 

Fourth Quarter 2015 Results

 

For the fourth quarter of 2015, the Company reported consolidated revenue of $424.9 million, an increase of 15.4% from $368.3 million in 2014. On a pro forma basis, assuming ownership of Matrix for all of the fourth quarter of 2014, consolidated revenue increased 10.2%.

 

Loss from continuing operations, net of tax, in the fourth quarter of 2015 was $25.7 million, or $1.68 per diluted common share, compared to income from continuing operations, net of tax, in the fourth quarter of 2014 of $11.4 million, or $0.73 per diluted common share. Adjusted Net Income (non-GAAP), in the fourth quarter of 2015 was $9.7 million, or $0.48 per diluted common share, compared to $6.0 million, or $0.38 per diluted common share in 2014. As expected, loss from continuing operations, net of tax, in the fourth quarter of 2015 included a $3.0 million loss on WD Services’ equity investment in Mission Providence, which will likely continue to incur losses through the first half of 2016 as the Australian joint venture ramps operations.

 

Adjusted EBITDA (non-GAAP) for the fourth quarter of 2015 was $21.9 million, compared to $24.6 million in 2014. The negative impact of Mission Providence to Adjusted EBITDA (non-GAAP) in the fourth quarter of 2015 was $3.4 million.

 

A reconciliation of income (loss) from continuing operations, net of tax, to Adjusted EBITDA and Adjusted Net Income and the calculation of Adjusted EPS are presented below. Beginning in the fourth quarter of 2015, the Company began including in the calculation of Adjusted EBITDA and Adjusted Net Income expenses related to restricted shares and cash placed into escrow accounts at the time of the Ingeus acquisition as well as redundancy costs associated with WD Services. The Company has updated the 2015 and 2014 quarterly and full year presentations of Adjusted EBITDA and Adjusted Net Income and the calculation of Adjusted EPS to be consistent with these changes.

 

 

Full-Year 2015 Results

 

For the year ended December 31, 2015, the Company reported consolidated revenue of $1.7 billion, an increase of 49.2% from $1.1 billion in 2014. On a pro forma basis, assuming ownership of Ingeus and Matrix for all of 2014, consolidated revenue increased 16.4%.

 

 
 

 

 

Loss from continuing operations, net of tax, in 2015 was $18.6 million, or $1.45 per diluted common share, compared to income from continuing operations, net of tax, in 2014 of $23.9 million, or $1.59 per diluted common share. Adjusted Net Income (non-GAAP) in 2015 was $41.2 million, or $2.03 per diluted common share, versus $30.5 million, or $2.03 per diluted common share in 2014. As expected, loss from continuing operations, net of tax, for the full year 2015 included a $11.0 million loss on WD Services’ equity investment in Mission Providence.

 

Adjusted EBITDA (non-GAAP) for 2015 was $103.5 million compared to $74.0 million in 2014. The negative impact of Mission Providence to Adjusted EBITDA (non-GAAP) in 2015 was $13.6 million.

 

Within US Healthcare Service, NET Services expanded its eligible membership base by over 15% to almost 25 million individuals, surpassing $1.0 billion in annual sales in the process, while HA Services expanded its Medicare, Medicaid, and commercial volumes in addition to launching CareDirect, a strategic care management offering,” added Lindstrom. “On the Global Workforce Development front, WD Services made significant investments in three key projects to further position itself as a global leader in the design and delivery of innovative and socially beneficial services to the government sector. Looking forward, we remain well positioned to continue our earnings growth into 2016 and beyond.”

 

In addition to the impact of Mission Providence, the fourth quarter and fiscal year 2015 results included a number of additional significant items within WD Services, the impact of which are as follows:

 

Expenses related to restricted shares and cash placed into escrow at the time of the Ingeus acquisition, including an accelerated amount of $20.9 million triggered when two sellers of Ingeus separated from the company – Q4 $20.9 million; FY $26.8 million

 

WD Services redundancy costs related to service delivery redesign under a large new program and the realignment of headcount with service volumes under programs nearing their end dates – Q4 $9.6 million; FY $12.2 million

 

Ingeus transaction related expenses – Q4 and FY $2.4 million

 

Costs to wind down WD Services’ operations in Sweden – Q4 and FY $0.3 million

 

Reduction in the fair value of Ingeus contingent consideration – Q4 and FY $2.5 million benefit. The fourth quarter of 2014 reflects a similar benefit of $16.1 million.

 

 

Segment Results

 

For analysis purposes, revenue, expenses, operating income, income (loss) from continuing operations, net of taxes, and Adjusted EBITDA (non-GAAP) are provided for our two US Healthcare Services segments and one Global Workforce Development segment for the three and twelve month periods ended December 31, 2015 and 2014. Segment results include revenue and expenses incurred by the segment, as well as an allocation of direct expenses incurred by Corporate on behalf of the segment. Indirect expenses, including unallocated corporate functions and expenses, such as executive, finance, human resources, information technology and legal, as well as the results of our captive insurance company and elimination entries recorded in consolidation are reflected in Corporate and Other.

 

 

US Healthcare Services

 

NET Services

 

NET Services revenue was $280.4 million for the fourth quarter of 2015, an increase of 15.0% compared to 2014. Operating income was $17.3 million, or 6.2% of revenue, in the fourth quarter of 2015, compared to $17.1 million, or 7.0% of revenue in 2014. Adjusted EBITDA (non-GAAP) was $19.7 million in the fourth quarter of 2015 compared to $19.3 million in 2014.

 

NET Services revenue was $1.1 billion for the full year 2015, an increase of 22.5% compared to 2014. Operating income increased 5.2% to $71.2 million in 2015 from $67.7 million in the prior year. Adjusted EBITDA (non-GAAP) increased $5.2 million, or 6.9%, to $80.7 million in 2015 from $75.4 million in the prior year.

 

NET Services 2015 revenue was favorably impacted by new state and MCO contacts as well as increased membership and favorable rate adjustments under certain existing contracts. As anticipated, service costs as a percentage of revenue increased in 2015 due to higher utilization by the Medicaid expansion population.

 

HA Services

 

HA Services fourth quarter and full year comparative results are significantly impacted by the acquisition of Matrix in October 2014.

 

 
 

 

 

HA Services revenue increased to $51.7 million in the fourth quarter of 2015 from $43.3 million in 2014. On a pro forma basis, assuming ownership of Matrix for all of the fourth quarter of 2014, HA Services revenue decreased by $9.0 million or 14.8% in the fourth quarter of 2015. Operating income was $4.9 million in the fourth quarter of 2015 compared to operating income of $2.1 million in 2014. Adjusted EBITDA (non-GAAP) was $12.5 million in the fourth quarter of 2015 compared to $8.4 million in 2014.

 

For full year 2015, HA Services revenue increased to $217.4 million from $43.3 million in 2014. On a pro forma basis, assuming ownership of Matrix for all of 2014, HA Services revenue increased by 2.9% in 2015. Operating income in 2015 was $22.1 million compared to operating income of $2.1 million in 2014. Included in operating income in 2015 was $2.1 million of expenses related to cash placed into escrow at the time of the Matrix acquisition. Adjusted EBITDA (non-GAAP) was $51.6 million in 2015 compared to $8.4 million in 2014.

 

The increase in HA Services revenue in 2015 was due to increased volumes delivered to the majority of clients, partially offset by volume declines with a single large customer as well as a slight decline in average pricing.

 

 

Global Workforce Development

 

WD Services

 

WD Services revenue for the fourth quarter of 2015 was $92.7 million, an increase of 14.3% compared to 2014. WD Services incurred an operating loss of $37.8 million in the fourth quarter of 2015 compared to operating income of $13.9 million in 2014. Adjusted EBITDA (non-GAAP) was negative $7.1 million in the fourth quarter of 2015 compared to positive $2.7 million in 2014. As discussed above, WD Services’ expense included certain items in the fourth quarter of 2015 that are excluded in our Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS calculations.

 

WD Services full year comparative results are significantly impacted due to the acquisition of Ingeus in May 2014. For full year 2015, WD Services revenue was $395.1 million, compared to $208.8 million for 2014. On a pro forma basis, assuming ownership of Ingeus for all of 2014, WD Services revenue increased by 9.4% in 2015. Operating loss was $42.4 million for 2015 compared to operating income of $17.5 million in 2014. Adjusted EBITDA (non-GAAP) was negative $3.2 million in 2015 compared to positive $15.2 million in 2014. As discussed above, WD Services expense included certain items in 2015 that are excluded in our Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS calculations.

 

The increase in WD Services revenue for the full year 2015 was primarily due to a new offender rehabilitation program that began in 2015, partially offset by an expected decline in volumes under the segment’s primary employability program in the United Kingdom. The decline in Adjusted EBITDA for the full year 2015 was primarily due to start-up and transition costs on new contracts, including $13.6 million related to the Mission Providence joint venture.

 

 

Non-GAAP Financial Measures and Adjustments

In addition to the financial results prepared in accordance with US generally accepted accounting principles (GAAP) provided throughout this press release, the Company has provided EBITDA, Adjusted EBITDA, Adjusted Net Income, and Adjusted diluted EPS, all from continuing operations, non-GAAP measurements. Providence’s management utilizes these non-GAAP measurements as a means to measure overall operating performance and to better compare current operating results with other companies within its industry. Details of the excluded items and a reconciliation of the non-GAAP financial measures to the most comparable GAAP financial measure are presented in the table below. The non-GAAP measures do not replace the presentation of our GAAP financial results. The Company has provided this supplemental non-GAAP information because the Company believes it provides meaningful comparisons of the results of Providence’s operations for the periods presented in this press release. The non-GAAP measures are not in accordance with, or an alternative for, GAAP and may be different from non-GAAP measures used by some other companies.

 

 

Conference Call

Providence will hold a conference call at 8:00 a.m. EST Friday, March 11, 2016 to discuss its financial results and corporate developments. Interested parties are invited to listen to the call live over the Internet at http://investor.prscholdings.com. The call is also available by dialing (855) 548-8661, or for international callers (412) 455-6143, and by using the passcode 63053175. A replay of the teleconference will be available on http://investor.prscholdings.com. A replay will also be available until March 18, 2016 by dialing (855) 859-2056 or (404) 537-3406 and using passcode 63053175.

 

About Providence

The Providence Service Corporation is a holding company whose subsidiaries provide critical healthcare and workforce development services, comprised of non-emergency transportation services, workforce development services, legal offender rehabilitation services, health assessment services, and care management services in the United States and abroad. For more information, please visit prscholdings.com.

 

 
 

 

 

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believe,” “demonstrate,” “expect,” “estimate,” “forecast,” “anticipate,” “should” and “likely” and similar expressions identify forward-looking statements. In addition, statements that are not historical should also be considered forward-looking statements. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of the date the statement was made. Such forward-looking statements are based on current expectations that involve a number of known and unknown risks, uncertainties and other factors which may cause actual events to be materially different from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, our continuing relationship with government entities and our ability to procure business from them, our ability to manage growing and changing operations, the implementation of the healthcare reform law, state budget changes and legislation and other risks detailed in Providence’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and subsequent filings. Providence is under no obligation to (and expressly disclaims any such obligation to) update any of the information in this press release if any forward-looking statement later turns out to be inaccurate whether as a result of new information, future events or otherwise.

 

Investor Relations Contact               

David Shackelton – Chief Financial Officer           

(520) 747-6600

 

 

--financial tables to follow--

  

 
 

 

 

Providence Service Corporation

Page 5

  

 

The Providence Service Corporation

Consolidated Statements of Income

(in thousands, except share and per share data)

(Unaudited)

 

   

Three months ended

   

Year ended

 
   

December 31,

   

December 31,

 
   

2015

   

2014

   

2015

   

2014

 
                                 

Service revenue, net

  $ 424,929     $ 368,310     $ 1,695,446     $ 1,136,211  
                                 

Operating expenses:

                               

Service expense

    415,493       333,032       1,544,365       1,023,785  

General and administrative expense

    14,531       4,062       73,616       44,501  

Depreciation and amortization

    13,856       11,030       53,469       22,833  
                                 

Total operating expenses

    443,880       348,124       1,671,450       1,091,119  
                                 

Operating income

    (18,951 )     20,186       23,996       45,092  
                                 

Other expenses:

                               

Interest expense, net

    3,487       9,682       16,213       13,122  

Equity in net loss of investee

    2,962       -       10,970       -  

Loss (gain) on foreign currency transactions

    274       26       (857 )     (37 )

Income (loss) from continuing operations before income taxes

    (25,674 )     10,478       (2,330 )     32,007  

Provision for income taxes

    9       (875 )     16,276       8,090  

Income (loss) from continuing operations, net of tax

    (25,683 )     11,353       (18,606 )     23,917  

Discontinued operations, net of tax

    101,465       (4,303 )     101,800       (3,642 )

Net income

    75,782       7,050       83,194       20,275  

Net loss attributable to noncontrolling interests

    615       -       502       -  

Net income attributable to Providence

  $ 76,397     $ 7,050     $ 83,696     $ 20,275  
                                 

Net income available to common stockholders

  $ 63,690     $ 7,050     $ 68,601     $ 20,275  
                                 

Basic earnings (loss) per common share:

                               

Continuing operations

  $ (1.68 )   $ 0.74     $ (1.45 )   $ 1.62  

Discontinued operations

    5.75       (0.28 )     5.75       (0.25 )

Basic earnings per common share

  $ 4.07     $ 0.46     $ 4.30     $ 1.37  
                                 

Diluted earnings (loss) per common share:

                               

Continuing operations

  $ (1.68 )   $ 0.73     $ (1.45 )   $ 1.59  

Discontinued operations

    5.75       (0.28 )     5.75       (0.24 )

Diluted earnings per common share

  $ 4.07     $ 0.45     $ 4.30     $ 1.35  
                                 

Weighted-average number of common shares outstanding:

                               

Basic

    15,641,761       15,379,414       15,960,905       14,765,303  

Diluted

    15,641,761       15,573,109       15,960,905       15,018,561  

 

 

--more--

 

 
 

 

 

Providence Service Corporation

Page 6

 

 

The Providence Service Corporation

Consolidated Balance Sheets

(in thousands, except share and per share data)

(Unaudited)

 

   

December 31,

 
   

2015

   

2014

 

Assets

               

Current assets:

               

Cash and cash equivalents

  $ 84,770     $ 135,258  

Accounts receivable, net of allowance of $5,587 in 2015 and $4,515 in 2014

    178,049       107,565  

Other receivables

    16,298       5,314  

Prepaid expenses and other

    30,718       43,134  

Restricted cash

    4,012       3,234  

Deferred tax assets

    5,877       4,148  

Current assets of discontinued operations held for sale

    -       75,993  

Total current assets

    319,724       374,646  

Property and equipment, net

    57,787       42,648  

Goodwill

    340,029       342,412  

Intangible assets, net

    285,951       323,904  

Other assets

    34,399       18,812  

Restricted cash, less current portion

    16,044       14,764  

Deferred tax asset

    42       -  

Non-current assets of discontinued operations held for sale

    -       51,748  

Total assets

  $ 1,053,976     $ 1,168,934  

Liabilities and stockholders' equity

               

Current liabilities:

               

Current portion of long-term obligations

  $ 31,375     $ 24,588  

Note payable to related party

    -       65,500  

Accounts payable

    30,007       46,557  

Accrued expenses

    130,552       99,273  

Accrued transportation costs

    64,537       55,492  

Deferred revenue

    28,667       10,743  

Reinsurance liability reserve

    10,134       11,077  

Current liabilities of discontinued operations held for sale

    -       26,228  

Total current liabilities

    295,272       339,458  

Long-term obligations, less current portion

    272,470       484,525  

Other long-term liabilities

    25,052       25,974  

Deferred tax liabilities

    93,474       96,928  

Non-current liabilities of discontinued operations held for sale

    -       635  

Total liabilities

    686,268       947,520  

Mezzanine equity

               

Convertible preferred stock, net: Authorized 10,000,000 shares; $0.001 par value; 803,518 and 0 issued and outstanding; 5.5%/8.5% dividend rate

    77,576       -  

Stockholders' equity

               

Common stock: Authorized 40,000,000 shares; $0.001 par value; 17,186,780 and 16,870,285 issued and outstanding (including treasury shares)

    17       17  

Additional paid-in capital

    293,012       261,155  

Retained earnings (accumulated deficit)

    69,209       (13,366 )

Accumulated other comprehensive loss, net of tax

    (16,831 )     (8,756 )

Treasury shares, at cost, 1,895,998 and 1,014,108 shares

    (54,823 )     (17,686 )

Total Providence stockholders' equity

    290,584       221,364  

Non controlling interest

    (452 )     50  

Total stockholders' equity

    290,132       221,414  

Total liabilities and stockholders' equity

  $ 1,053,976     $ 1,168,934  

 

 

--more--

 

 
 

 

 

Providence Service Corporation

Page 7

 

 

The Providence Service Corporation

Consolidated Statements of Cash Flows (1)

(in thousands)

(Unaudited)

 

   

Year ended December 31,

 
   

2015

   

2014

 

Operating activities

               

Net income

  $ 83,194     $ 20,275  

Adjustments to reconcile net income to net cash provided by operating activities:

               

Depreciation

    20,234       14,051  

Amortization

    38,067       15,437  

Provision for doubtful accounts

    2,539       2,589  

Stock based compensation

    26,622       7,562  

Deferred income taxes

    (10 )     (5,208 )

Amortization of deferred financing costs

    2,041       5,561  

Excess tax benefit upon exercise of stock options

    (2,857 )     (2,722 )

Gains on remeasurement of contingent consideration

    (2,469 )     (16,314 )

Asset impairment charge

    1,593       6,915  

Equity in net loss of investee

    10,970       -  

Gain on sale of business

    (100,332 )     -  

Other non-cash charges

    (419 )     3,088  

Changes in operating assets and liabilities:

               

Accounts receivable

    (86,627 )     (17,208 )

Other receivables

    (5,104 )     327  

Restricted cash

    (20 )     266  

Prepaid expenses and other

    19,778       (7,954 )

Reinsurance liability reserve

    (611 )     3,761  

Accounts payable and accrued expenses

    (21,900 )     28,483  

Accrued transportation costs

    9,045       530  

Deferred revenue

    19,043       (3,454 )

Other long-term liabilities

    463       (790 )

Net cash provided by operating activities

    13,240       55,195  

Investing activities

               

Purchase of property and equipment

    (35,072 )     (23,242 )

Net increase (decrease) in short-term investments

    (18 )     (19 )

Acquisition of businesses, net of cash acquired

    (3,433 )     (416,986 )

Sale of business, net of cash sold

    199,943       -  

Equity investments

    (16,072 )     -  

Restricted cash for reinsured claims losses

    (2,058 )     (3,108 )

Net cash provided by (used in) investing activities

    143,290       (443,355 )

Financing activities

               

Proceeds from issuance of preferred stock, net of issuance costs

    80,667       -  

Preferred stock dividends

    (3,928 )     -  

Repurchase of common stock, for treasury

    (36,838 )     (524 )

Proceeds from common stock issued pursuant to stock option exercise

    4,894       11,019  

Excess tax benefit upon exercise of stock options

    2,857       2,722  

Proceeds from long-term debt

    34,000       501,200  

Repayment of long-term debt

    (305,125 )     (48,625 )

Payment of contingent consideration

    (7,496 )     -  

Debt financing costs

    (286 )     (12,769 )

Other

    -       73  

Net cash (used in) provided by financing activities

    (231,255 )     453,096  

Effect of exchange rate changes on cash

    (911 )     (3,525 )

Net change in cash

    (75,636 )     61,411  

Cash at beginning of period

    160,406       98,995  

Cash at end of period

  $ 84,770     $ 160,406  

 

 

--more--

 

 
 

 

 

Providence Service Corporation

Page 8

 

 

The Providence Service Corporation

Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA & Segment Information

(in thousands)

(Unaudited)

 

 

   

Three Months Ended December 31, 2015

 
   

NET Services

   

WD Services

   

HA Services

   

Corporate

and Other

   

Total

 
                                         

Service revenue, net

  $ 280,435     $ 92,719     $ 51,719     $ 56     $ 424,929  
                                         

Operating expenses:

                                       

Service expense

    257,963       120,489       38,671       (1,630 )     415,493  

General and administrative expense

    2,746       6,377       544       4,864       14,531  

Depreciation and amortization

    2,434       3,688       7,616       118       13,856  

Total operating expenses

    263,143       130,554       46,831       3,352       443,880  
                                         

Operating income

    17,292       (37,835 )     4,888       (3,296 )     (18,951 )
                                         

Other expenses:

                                       

Interest expense, net

    (1 )     (12 )     (3 )     3,503       3,487  

Equity in net loss of investee

    -       2,962       -       -       2,962  

Loss (gain) on foreign currency transactions

    -       274       -       -       274  

Income (loss) from continuing operations, before income tax

    17,293       (41,059 )     4,891       (6,799 )     (25,674 )

Provision for income taxes

    6,660       (3,087 )     (30 )     (3,534 )     9  

Income (loss) from continuing operations, net of taxes

    10,633       (37,972 )     4,921       (3,265 )     (25,683 )
                                         

Interest expense, net

    (1 )     (12 )     (3 )     3,503       3,487  

Provision for income taxes

    6,660       (3,087 )     (30 )     (3,534 )     9  

Depreciation and amortization

    2,434       3,688       7,616       118       13,856  
                                         

EBITDA

    19,726       (37,383 )     12,504       (3,178 )     (8,331 )
                                         

WD Services adjustments (1)

    -       30,251       -       -       30,251  
                                         

Adjusted EBITDA

  $ 19,726     $ (7,132 )   $ 12,504     $ (3,178 )   $ 21,920  

 

 

(1) Includes expense related to restricted shares and cash placed into escrow at the time of the Ingeus acquisition of $20,906, redundancy costs of $9,552, Ingeus transaction related expenses of $2,406, income tax benefit and D&A expense included within loss on equity investment of ($418), contingent consideration adjustment of ($2,469), and loss on foreign currency translation of $274.

 

 

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Providence Service Corporation

Page 9

 

 

The Providence Service Corporation

Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA & Segment Information

(in thousands)

(Unaudited)

 

   

Three Months Ended December 31, 2014

 
   

NET Services

   

WD Services

   

HA Services

   

Corporate

and Other

   

Total

 
                                         

Service revenue, net

  $ 243,859     $ 81,102     $ 43,331     $ 18     $ 368,310  
                                         

Operating expenses:

                                       

Service expense

    222,295       74,857       35,185       695       333,032  

General and administrative expense

    2,287       (10,634 )     421       11,988       4,062  

Depreciation and amortization

    2,146       2,965       5,619       300       11,030  

Total operating expenses

    226,728       67,188       41,225       12,983       348,124  
                                         

Operating income

    17,131       13,914       2,106       (12,965 )     20,186  
                                         

Other expenses:

                                       

Interest expense, net

    -       188       (6 )     9,500       9,682  

Loss (gain) on foreign currency transactions

    -       337       -       (311 )     26  

Income (loss) from continuing operations, before income tax

    17,131       13,389       2,112       (22,154 )     10,478  

Provision for income taxes

    7,158       (621 )     956       (8,368 )     (875 )

Income (loss) from continuing operations, net of taxes

    9,973       14,010       1,156       (13,786 )     11,353  
                                         

Interest expense, net

    -       188       (6 )     9,500       9,682  

Provision for income taxes

    7,158       (621 )     956       (8,368 )     (875 )

Depreciation and amortization

    2,146       2,965       5,619       300       11,030  
                                         

EBITDA

    19,277       16,542       7,725       (12,354 )     31,190  
                                         

Acquisition costs

    -       -       -       3,827       3,827  

Integration and restructuring costs

    -       -       693       84       777  

General and administrative financing costs

    -       -               2,971       2,971  

WD Services adjustments (1)

    -       (14,154 )     -       -       (14,154 )

Loss on foreign currency translation

    -       337       -       (311 )     26  
                                         

Adjusted EBITDA

  $ 19,277     $ 2,725     $ 8,418     $ (5,783 )   $ 24,637  

 

 

(1) Includes expense related to restricted shares and cash placed into escrow at the time of the Ingeus acquisition of $1,958 and contingent consideration adjustment of ($16,112).

 

 

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Providence Service Corporation

Page 10

 

 

The Providence Service Corporation

Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA & Segment Information

(in thousands)

(Unaudited)

 

   

Year Ended December 31, 2015

 
   

NET Services

   

WD Services

   

HA Services

   

Corporate

and Other

   

Total

 
                                         

Service revenue, net

  $ 1,083,015     $ 395,059     $ 217,436     $ (64 )   $ 1,695,446  
                                         

Operating expenses:

                                       

Service expense

    991,659       393,803       163,211       (4,308 )     1,544,365  

General and administrative expense

    10,704       29,846       2,630       30,436       73,616  

Depreciation and amortization

    9,429       13,776       29,472       792       53,469  

Total operating expenses

    1,011,792       437,425       195,313       26,920       1,671,450  
                                         

Operating income

    71,223       (42,366 )     22,123       (26,984 )     23,996  
                                         

Other expenses:

                                       

Interest expense, net

    (2 )     (104 )     (16 )     16,335       16,213  

Equity in net loss of investee

    -       10,970       -       -       10,970  

Loss (gain) on foreign currency transactions

    -       (857 )     -       -       (857 )

Income (loss) from continuing operations, before income tax

    71,225       (52,375 )     22,139       (43,319 )     (2,330 )

Provision for income taxes

    27,241       (1,064 )     7,007       (16,908 )     16,276  

Income (loss) from continuing operations, net of taxes

    43,984       (51,311 )     15,132       (26,411 )     (18,606 )
                                         

Interest expense, net

    (2 )     (104 )     (16 )     16,335       16,213  

Provision for income taxes

    27,241       (1,064 )     7,007       (16,908 )     16,276  

Depreciation and amortization

    9,429       13,776       29,472       792       53,469  
                                         

EBITDA

    80,652       (38,703 )     51,595       (26,192 )     67,352  
                                         

WD Services adjustments (1)

    -       35,487       -       -       35,487  

Charges related to the separation of an of an executive officer, net

    -       -       -       695       695  
                                         

Adjusted EBITDA

  $ 80,652     $ (3,216 )   $ 51,595     $ (25,497 )   $ 103,534  

 

 

(1) Includes expense related to restricted shares and cash placed into escrow at the time of the Ingeus acquisition of $26,805, redundancy costs of $12,197, Ingeus transaction related expenses of $2,406, income tax benefit and D&A expense included within loss on equity investment of ($2,595), contingent consideration adjustment of ($2,469), and loss on foreign currency translation of ($857).

 

 

--more--

 

 
 

 

 

Providence Service Corporation

Page 11

 

 

The Providence Service Corporation

Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA & Segment Information

(in thousands)

(Unaudited)

 

   

Year Ended December 31, 2014

 
   

NET Services

   

WD Services

   

HA Services

   

Corporate

and Other

   

Total

 
                                         

Service revenue, net

  $ 884,287     $ 208,763     $ 43,331     $ (170 )   $ 1,136,211  
                                         

Operating expenses:

                                       

Service expense

    800,454       184,919       35,185       3,227       1,023,785  

General and administrative expense

    8,406       (2,072 )     421       37,746       44,501  

Depreciation and amortization

    7,699       8,406       5,619       1,109       22,833  

Total operating expenses

    816,559       191,253       41,225       42,082       1,091,119  
                                         

Operating income

    67,728       17,510       2,106       (42,252 )     45,092  
                                         

Other expenses:

                                       

Interest expense, net

    (8 )     (113 )     (6 )     13,249       13,122  

Loss (gain) on foreign currency transactions

    -       336       -       (373 )     (37 )

Income (loss) from continuing operations,  before income taxes

    67,736       17,287       2,112       (55,128 )     32,007  

Provision for income taxes

    26,893       416       956       (20,175 )     8,090  

Income (loss) from continuing operations, net of tax

    40,843       16,871       1,156       (34,953 )     23,917  
                                         

Interest expense, net

    (8 )     (113 )     (6 )     13,249       13,122  

Provision for income taxes

    26,893       416       956       (20,175 )     8,090  

Depreciation and amortization

    7,699       8,406       5,619       1,109       22,833  
                                         

EBITDA

    75,427       25,580       7,725       (40,770 )     67,962  
                                         

Acquisition costs

    -       -       -       11,838       11,838  

Integration and restructuring costs

    -       887       693       781       2,361  

General and administrative financing costs

    -       -       -       2,971       2,971  

WD Services adjustments (1)

    -       (11,621 )     -       -       (11,621 )

Loss on foreign currency translation

    -       336       -       (373 )     (37 )

Charges related to the separation of an executive officer, net

    -       -       -       511       511  
                                         

Adjusted EBITDA

  $ 75,427     $ 15,182     $ 8,418     $ (25,042 )   $ 73,985  

 

 

(1) Includes expense related to restricted shares and cash placed into escrow at the time of the Ingeus acquisition of $4,491 and contingent consideration adjustment of ($16,112).

 

 

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Providence Service Corporation

Page 12

 

 

The Providence Service Corporation

Reconciliation of Non-GAAP Financial Measures

Adjusted Net Income and Adjusted Net Income per Common Share

(in thousands, except share and per share data)

(Unaudited)

 

   

Three months ended December 31,

   

Year ended December 31,

 
      2015 (1)       2014 (2)       2015 (3)       2014 (4)  
                                 

Income (loss) from continuing operations, net of tax

  $ (25,683 )   $ 11,353     $ (18,606 )   $ 23,917  

Net loss attributable to noncontrolling interests

    615       -       502       -  
                                 

Acquisition costs

    -       3,827       -       11,838  

Integration and restructuring costs

    -       777       -       2,361  

General and administrative financing costs

    -       2,971       -       2,971  

WD Services adjustments

    30,860       (14,154 )     40,192       (11,621 )

Loss (gain) on foreign currency translation

    274       26       (857 )     (37 )

Payments related to separation arrangements with certain former executive officers, net

    -       -       695       511  

Intangible amortization expense

    8,909       6,815       35,612       11,985  

Tax effected impact of adjustments

    (5,282 )     (5,658 )     (16,301 )     (11,472 )
                                 

Adjusted Net Income

    9,693       5,957       41,237       30,453  
                                 

Dividends on convertible preferred stock

    (1,120 )     -       (3,935 )     -  

Less: Accretion of convertibe preferred stock discount

    -       -       (1,071 )     -  

Income allocated to participating securities

    (979 )     -       (3,591 )     -  
                                 

Adjusted Net Income available to common stockholders

  $ 7,594     $ 5,957     $ 32,640     $ 30,453  
                                 

Adjusted Net Income per Common Share

  $ 0.48     $ 0.38     $ 2.03     $ 2.03  
                                 

Diluted weighted-average number of common shares outstanding

    15,803,678       15,573,109       16,115,604       15,018,561  

 

 

(1) WD Services adjustment includes accelerated expense related to restricted shares and cash placed into escrow at the time of the Ingeus acquisition of $20,906, redundancy costs of $9,552, Ingeus transaction related expenses of $2,406, amortization expense included within loss on equity investment of $465, and contingent consideration adjustment of ($2,469).

   
 

(2) WD Services adjustment includes expense related to restricted shares and cash placed into escrow at the time of the Ingeus acquisition of $1,958 and contingent consideration adjustment of ($16,112).

   
 

(3) WD Services adjustment includes accelerated expense related to restricted shares and cash placed into escrow at the time of the Ingeus acquisition of $26,805, redundancy costs of $12,197, Ingeus transaction related expenses of $2,406, amortization expense included within loss on equity investment of $1,253, and contingent consideration adjustment of ($2,469).

   
 

(4) WD Services adjustment includes expense related to restricted shares and cash placed into escrow at the time of the Ingeus acquisition of $4,491 and contingent consideration adjustment of ($16,112).

 

 

###