UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 6, 2015
The Providence Service Corporation
(Exact name of registrant as specified in its charter)
Delaware |
|
001-34221 |
|
86-0845127 |
(State or other jurisdiction of incorporation) |
|
(Commission File Number) |
|
(IRS Employer Identification No.) |
64 East Broadway Blvd., Tucson, Arizona |
|
85701 | ||
(Address of principal executive offices) |
|
(Zip Code) |
Registrant’s telephone number, including area code: (520) 747-6600
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On August 6, 2015, we issued a press release containing certain financial information for the quarter ended June 30, 2015. As noted in the press release, we have provided non-GAAP financial measures (earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted EBITDA, adjusted net income and adjusted diluted earnings per share), the reasons we have provided such measures and a reconciliation of the non-GAAP measures to the most directly comparable GAAP measure. Readers should consider the non-GAAP measures in addition to, and not as a substitute for, the measure of financial performance prepared in accordance with GAAP. In this regard, GAAP refers to accounting principles generally accepted in the United States. A copy of the press release is being furnished hereto as Exhibit 99.1 and is incorporated herein by reference.
On our earnings call scheduled for August 7, 2015, we intend to provide certain pro forma financial measures assuming our acquisitions of both Ingeus Limited (“Ingeus”) and CCHN Group Holdings, Inc., the parent company of Community Care Health Network, Inc. (d/b/a Matrix Medical Network) (“Matrix”) occurred on January 1, 2014. The table below presents our revenue and a reconciliation of net income to adjusted EBITDA for the twelve months ended June 30, 2015, assuming that we had acquired Ingeus and Matrix on January 1, 2014:
(in thousands) |
||||
Pro forma twelve months ended |
||||
June 30, 2015 |
||||
Service revenue |
$ | 1,936,357 | ||
Net income |
$ | 28,160 | ||
Interest expense, net |
29,181 | |||
Provision for income taxes |
17,983 | |||
Depreciation and amortization |
60,777 | |||
EBITDA |
136,101 | |||
Acquisition costs |
10 | |||
Integration and restructuring charges |
1,927 | |||
Ingeus acquisition related equity compensation |
5,998 | |||
Gain on foreign currency translation |
(559 | ) | ||
Charges related to the separation of an executive officer, net |
695 | |||
Contingent consideration adjustments |
(16,314 | ) | ||
Asset impairment charges |
6,915 | |||
Adjusted EBITDA |
$ | 134,773 |
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit |
|
Description |
99.1 |
|
Company’s Press Release dated August 6, 2015. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
THE PROVIDENCE SERVICE CORPORATION | ||
Date: August 6, 2015 |
By: |
/s/ David Shackelton |
Name: |
David Shackelton | |
Title: |
Interim Chief Financial Officer |
Exhibit 99.1
AT THE COMPANY |
AT CAMERON ASSOCIATES |
David Shackelton – Interim Chief Financial Officer |
Alison Ziegler 212/554-5469 |
520/747-6600 |
|
FOR IMMEDIATE RELEASE
Providence Service Corporation Reports Second Quarter 2015 Results
Second Quarter 2015 Financial Highlights:
● |
Revenue of $508.3 million |
● |
Diluted earnings per common share of $0.26, Adjusted diluted earnings per common share (non-GAAP) of $0.67 |
● |
Adjusted EBITDA (non-GAAP) of $36.0 million |
● |
Cash flow from operations of $4.7 million |
TUCSON, ARIZONA – August 6, 2015 – The Providence Service Corporation (Nasdaq: PRSC) today announced its financial results for the second quarter and six months ended June 30, 2015. Included in the results are results of the operations of Ingeus and Matrix Medical Network acquired on May 31, 2014 and October 24, 2014, respectively.
Second Quarter 2015 Results
For the second quarter of 2015, the Company reported consolidated revenue of $508.3 million, an increase of 47.8% from $344.0 million in the comparable period of 2014. The 2015 results included $140.7 million of revenue contributed by Ingeus and Matrix in the second quarter of 2015. The second quarter of 2014 included $28.8 million in revenue from Ingeus. Excluding revenue attributable to these acquired businesses, consolidated revenue was $367.6 million in the second quarter of 2015, an increase of 16.6% from the comparable period of 2014.
Service expense as a percentage of revenue was 88.6% in the second quarter of 2015 compared to 89.9% in the second quarter of 2014. Second quarter 2015 and 2014 service expense included a $1.5 million and $0.5 million charge, respectively, related to the amortization of the fair value of restricted stock awards issued in connection with the acquisition of Ingeus. General and administrative (G&A) expense as a percentage of revenue was 4.6% in the second quarter of 2015 compared to 4.7% in the second quarter of 2014. Second quarter 2015 G&A expense included a $0.7 million charge related to stock award modifications related to a separation agreement with our former chief executive officer. The Company also reported a loss on equity investment of $1.1 million in the quarter related to the Company’s investment in Mission Providence, a joint venture in Australia, which continued to incur start-up costs during the second quarter of 2015.
The Company reported net income available to common shareholders of $4.2 million, or $0.26 per diluted common share, in the second quarter of 2015 compared to net income available to common shareholders of $6.7 million, or $0.46 per diluted common share, in the prior year period. Adjusted net income available to common shareholders (non-GAAP) in the second quarter of 2015 was $10.8 million, or $0.67 per diluted common share, versus second quarter 2014 adjusted net income available to common shareholders (non-GAAP) of $10.7 million, or $0.74 per diluted common share. A reconciliation of net income to adjusted net income available to common shareholders (non-GAAP) and the calculation of adjusted diluted earnings per common share is presented below.
Adjusted EBITDA (non-GAAP) for the second quarter of 2015 was $36.0 million compared to $22.5 million in the same period last year. Adjusted EBITDA for the second quarter of 2015 includes the loss on equity investment of $1.1 million related to Mission Providence. A reconciliation of net income to EBITDA and Adjusted EBITDA is presented below.
James Lindstrom, Chief Executive Officer, stated, “Our financial results in the second quarter benefited from strong volumes in HA Services, execution on operational improvement and organic growth initiatives in Human Services, and increased membership and new contracts in NET Services. In our WD Services segment, management remained focused on launching large, recently won contracts. Partially due to delayed start-up expenses and additional complementary revenue sources associated with these new contracts, the financial performance of WD Services exceeded our internal expectations for the second quarter. While we are pleased with our strong second quarter and first half performance, quarterly volatility exists across our segments due to a variety of factors including, but not limited to, seasonality and the timing of contract start-up expenses. Thus, we remain focused on our annual performance as previously communicated as well as delivering unique, value-add solutions for our clients and generating long term intrinsic value per share.”
Year to Date 2015 Results
For the first six months of 2015, the Company reported consolidated revenue of $1.0 billion, an increase of 60.1% from $633.4 million in the comparable period of 2014. The 2015 results included $299.1 million of revenue contributed by Ingeus and Matrix during the first half of 2015. The first half of 2014 included $28.8 million in revenue from Ingeus. Excluding revenue attributable to these acquired businesses, consolidated revenue was $715.0 million, an increase of 18.3% from the comparable period of 2014.
Service expense as a percentage of revenue was 88.2% in the first half of 2015 compared to 89.8% in the first half of 2014. First half 2015 and 2014 service expense included a $3.1 million and $0.5 million charge, respectively, related to the amortization of the fair value of restricted stock awards issued in connection with the acquisition of Ingeus. G&A expense as a percentage of revenue was 4.7% in the first half of 2015 and 2014. First half 2015 and 2014 G&A expense included a $0.7 million and $0.5 million charge, respectively, related to separation arrangements with certain former executive officers. The Company also reported a loss on equity investment of $3.5 million in the first half of 2015 related to the Company’s investment in Mission Providence, which incurred start-up costs during the first half of 2015 related to successful bidding activity.
The Company reported net income available to common shareholders of $9.2 million, or $0.57 per diluted common share, in the first half of 2015 compared to net income available to common shareholders of $13.0 million, or $0.91 per diluted common share, in the prior year period. Adjusted net income available to common shareholders (non-GAAP) in the first half of 2015 was $23.2 million, or $1.44 per diluted common share, versus first half 2014 adjusted net income available to common shareholders (non-GAAP) of $19.4 million, or $1.36 per diluted common share. A reconciliation of net income to adjusted net income available to common shareholders (non-GAAP) and the calculation of adjusted earnings per diluted common share is presented below.
Adjusted EBITDA (non-GAAP) for the first half of 2015 was $72.3 million compared to $40.7 million in the same period last year. Adjusted EBITDA for the first half of 2015 includes the loss on equity investment of $3.5 million related to Mission Providence. A reconciliation of net income to EBITDA and Adjusted EBITDA is presented below.
Segment Results
For analysis purposes, revenue, expenses, operating income, net income, EBITDA (non-GAAP), and Adjusted EBITDA (non-GAAP) on a comparable basis are provided for Providence’s four segments for the three and six month periods ended June 30, 2015 and 2014. As previously disclosed, beginning in 2015, the Company began analyzing the results of the segments without the historical allocation of indirect corporate costs. Only corporate costs that represent expenses directly attributable to specific segments are allocated to the respective segment. Additionally, in 2015, the Company’s legacy workforce development businesses were transferred to the management team of the WD Services segment. As such, the operating segment results for 2014 have been recast.
Non-emergency Transportation (NET) Services
Revenue from the NET Services segment increased 25.1% to $270.7 million in the second quarter of 2015 from $216.3 million in the prior year period. Service expense for the segment increased to $246.9 million, or 91.2% of NET Services revenue, in the second quarter of 2015 compared to $196.5 million or 90.8% of NET Services revenue in the second quarter of 2014. NET Services operating income increased 18.5% to $18.9 million in the second quarter from $15.9 million in the prior year period. NET Services Adjusted EBITDA (non-GAAP) increased $3.4 million, or 19.2%, to $21.2 million in the second quarter from $17.8 million in the prior year period.
In the first half of 2015, revenue from the NET Services segment increased 26.8% to $525.5 million from $414.4 million in the prior year period. Service expense for the segment increased to $476.2 million, or 90.6% of NET Services revenue, in the first half of 2015 compared to $371.7 million or 89.7% of NET Services revenue in the first half of 2014. NET Services operating income increased 13.0% to $39.6 million in the first half of 2015 from $35.1 million in the prior year period. NET Services Adjusted EBITDA (non-GAAP) increased $5.5 million, or 14.3%, to $44.2 million in the first half of 2015 from $38.7 million in the prior year period.
Revenue for the NET Services segment was favorably impacted by new contracts in Rhode Island, Maine, and Texas and increased membership in certain states, partially offset by the elimination of contracts in Mississippi and Connecticut. As anticipated, service costs as a percentage of revenue continued to increase due to higher utilization related to increased usage by expansion and woodwork populations in addition to covered members becoming more aware of their NET benefits.
Human Services
Revenue from the Human Services segment decreased 1.2% to $90.2 million in the second quarter of 2015, compared to $91.3 million in the second quarter of 2014. Both periods exclude revenue related to the legacy workforce development services business that was transitioned to the WD Services segment at the beginning of 2015. Service expense for the segment was $78.7 million, or 87.2% of Human Services revenue, in the second quarter of 2015 compared to $82.6 million, or 90.4% of Human Services revenue in 2014. Human Services operating income was $4.8 million in the second quarter compared to $2.0 million in the prior year period. Human Services Adjusted EBITDA (non-GAAP) increased $2.7 million to $6.6 million in the second quarter of 2015 from $3.8 million in the prior year period.
In the first half of 2015, revenue from the Human Services segment increased 0.6% to $176.4 million, compared to $175.4 million in the first half of 2014. Both periods exclude revenue related to the legacy workforce development services business that was transitioned to the WD Services segment at the beginning of 2015. Service expense for the segment was $156.3 million, or 88.6% of Human Services revenue, in the first half of 2015 compared to $161.5 million, or 92.1% of Human Services revenue in 2014. Human Services operating income was $6.6 million in the first half of the year compared to $0.7 million in the prior year period. Human Services Adjusted EBITDA (non-GAAP) increased $5.6 million to $10.2 million in the first half of 2015 from $4.6 million in the prior year period.
Revenue in the Human Services segment was positively impacted by two acquisitions that occurred in 2014 and organic expansion in certain markets, and negatively impacted by the termination of the Texas foster care contract and the exiting of certain underperforming services and offices. Service costs as a percentage of revenue benefited from the termination of the Texas foster care contract and several business improvement and streamlining initiatives executed throughout the organization.
Workforce Development (WD) Services
WD Services revenue was $92.2 million in the second quarter of 2015 and relates primarily to the Ingeus business that was acquired on May 30, 2014. In the second quarter of 2014, WD Services revenue was $36.6 million and represents the legacy workforce development services business that had historically been part of Human Services as well as one month of operations of Ingeus. Service expense for the segment was $83.2 million, or 90.3% of WD revenue, in the second quarter of 2015. WD Services operating loss was $2.4 million in the second quarter of 2015 and included a $1.5 million expense related to the amortization of the fair value of restricted stock awards issued in connection with the acquisition of Ingeus. WD Services Adjusted EBITDA (non-GAAP) was $1.4 million in the second quarter of 2015 and included a loss on equity investment of $1.1 million related to Mission Providence. In the second quarter of 2014, service expense was $30.5 million, or 83.2% of WD revenue, operating income was $2.6 million, and Adjusted EBITDA (non-GAAP) was $5.1 million.
In the first half of 2015, WD Services revenue, related primarily to the acquired Ingeus operations, was $199.8 million. In the first half of 2014, WD Services revenue was $44.1 million and represents the legacy workforce development services business that had historically been part of Human Services as well as one month of operations of Ingeus. Service expense for the segment was $177.5 million, or 88.8% of WD revenue, in the first half of 2015. WD Services operating income was $0.4 million in the first half of 2015 and included a $3.1 million expense related to the amortization of the fair value of restricted stock awards issued in connection with the acquisition of Ingeus. WD Services Adjusted EBITDA (non-GAAP) was $6.6 million in the first half of 2015 and included a loss on equity investment of $3.5 million related to Mission Providence. In the first half of 2014, service expense was $36.9 million, or 83.7% of WD revenue, operating income was $3.0 million, and Adjusted EBITDA (non-GAAP) was $5.7 million.
Health Assessment (HA) Services
HA Services revenue, primarily derived from providing comprehensive health assessments, was $55.4 million in the second quarter of 2015 and is comprised of revenue from Matrix, acquired on October 23, 2014. Service expense for the segment was $41.2 million, or 74.4% of HA Services revenue. HA Services operating income was $6.3 million in the second quarter of 2015, and HA Services Adjusted EBITDA (non-GAAP) was $13.5 million for the same period.
In the first half of 2015, HA Services revenue was $112.8 million. Service expense for the segment was $84.4 million, or 74.8% of HA Services revenue. HA Services operating income was $12.8 million in the first half of 2015, and HA Services Adjusted EBITDA (non-GAAP) was $27.1 million for the same period.
Conference Call
Providence will hold a conference call at 11:00 a.m. EDT (8:00 a.m. PDT/MST) Friday, August 7, 2015 to discuss its financial results and corporate developments. Interested parties are invited to listen to the call live over the Internet at http://investor.provcorp.com. The call is also available by dialing (866) 515-2912, or for international callers (617) 399-5126, and by using the passcode 83463896. A replay of the teleconference will be available on http://investor.provcorp.com. A replay will also be available until August 14, 2015 by dialing (888) 286-8010 or (617) 801-6888 and using passcode 80558015.
About Providence
Providence is a Tucson, Arizona-based company that provides and manages government sponsored human services, innovative global employment services, comprehensive health assessment and care management services, and non-emergency transportation services. It offers: (1) non-emergency transportation management services to state Medicaid programs, local government agencies, hospital systems, health maintenance organizations, private managed care organizations and commercial insurers, as well as to individuals with limited mobility, people with limited means of transportation, people with disabilities and Medicaid members; (2) home- and community-based counseling services, which include home-based and intensive home-based counseling, workforce development, substance abuse treatment services, school support services and correctional services; (3) foster care and therapeutic foster care services; (4) case management, referral and monitoring services; (5) social improvement, employment and welfare services to various international government bodies and corporations; and (6) in-home comprehensive health assessment and care management services primarily to Medicare Advantage programs. Providence is unique in that it provides and manages its human services primarily in the client’s own home or in community based settings, rather than in hospitals or treatment facilities and provides its non-emergency transportation services clients through local transportation providers rather than an owned fleet of vehicles.
Non-GAAP Presentation
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, 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.
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.
--financial tables to follow--
Providence Service Corporation
Page 5
The Providence Service Corporation
Unaudited Condensed Consolidated Statements of Income
(in thousands except share and per share data)
Three months ended |
Six months ended |
|||||||||||||||
June 30, |
June 30, |
|||||||||||||||
2015 |
2014 |
2015 |
2014 |
|||||||||||||
Service revenue |
$ | 508,251 | $ | 343,953 | $ | 1,014,046 | $ | 633,356 | ||||||||
Operating expenses: |
||||||||||||||||
Service expense |
450,058 | 309,130 | 893,926 | 569,066 | ||||||||||||
General and administrative expense |
23,316 | 16,156 | 48,000 | 29,775 | ||||||||||||
Depreciation and amortization |
14,957 | 5,143 | 29,857 | 8,871 | ||||||||||||
Total operating expenses |
488,331 | 330,429 | 971,783 | 607,712 | ||||||||||||
Operating income |
19,920 | 13,524 | 42,263 | 25,644 | ||||||||||||
Other expenses: |
||||||||||||||||
Interest expense, net |
4,545 | 1,261 | 10,552 | 2,846 | ||||||||||||
Loss on equity investment |
1,059 | - | 3,542 | - | ||||||||||||
(Gain) Loss on foreign currency translation |
(714 | ) | 61 | (395 | ) | 101 | ||||||||||
Income before income taxes |
15,030 | 12,202 | 28,564 | 22,697 | ||||||||||||
Provision for income taxes |
8,396 | 5,530 | 15,693 | 9,738 | ||||||||||||
Net income |
$ | 6,634 | $ | 6,672 | $ | 12,871 | $ | 12,959 | ||||||||
Net income available to common stockholders |
$ | 4,181 | $ | 6,672 | $ | 9,243 | $ | 12,959 | ||||||||
Earnings per common share: |
||||||||||||||||
Basic |
$ | 0.26 | $ | 0.47 | $ | 0.58 | $ | 0.93 | ||||||||
Diluted |
$ | 0.26 | $ | 0.46 | $ | 0.57 | $ | 0.91 | ||||||||
Weighted-average number of common shares outstanding: |
||||||||||||||||
Basic |
16,097,198 | 14,171,013 | 16,036,959 | 14,006,944 | ||||||||||||
Diluted |
16,240,898 | 14,453,964 | 16,193,372 | 14,306,898 |
--more--
Providence Service Corporation
Page 6
The Providence Service Corporation
Condensed Consolidated Balance Sheets
(in thousands except share and per share data)
June 30, |
December 31, |
|||||||
2015 |
2014 |
|||||||
Assets |
(Unaudited) |
|||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 145,161 | $ | 160,406 | ||||
Accounts receivable, net of allowance of $6,893 in 2015 and $6,034 in 2014 |
211,741 | 151,344 | ||||||
Other receivables |
15,131 | 6,866 | ||||||
Prepaid expenses and other |
42,149 | 46,157 | ||||||
Restricted cash |
3,641 | 3,807 | ||||||
Deferred tax assets |
998 | 6,066 | ||||||
Total current assets |
418,821 | 374,646 | ||||||
Property and equipment, net |
62,127 | 57,148 | ||||||
Goodwill |
358,483 | 355,641 | ||||||
Intangible assets, net |
321,535 | 340,673 | ||||||
Other assets |
40,803 | 22,373 | ||||||
Restricted cash, less current portion |
15,275 | 14,764 | ||||||
Total assets |
$ | 1,217,044 | $ | 1,165,245 | ||||
Liabilities and stockholders' equity |
||||||||
Current liabilities: |
||||||||
Current portion of long-term obligations |
$ | 29,663 | $ | 25,188 | ||||
Note payable to related party |
- | 65,500 | ||||||
Accounts payable |
56,441 | 48,061 | ||||||
Accrued expenses |
127,722 | 121,857 | ||||||
Accrued transportation costs |
61,514 | 55,492 | ||||||
Deferred revenue |
27,733 | 12,245 | ||||||
Reinsurance liability reserve |
17,861 | 11,115 | ||||||
Total current liabilities |
320,934 | 339,458 | ||||||
Long-term obligations, less current portion |
458,667 | 484,525 | ||||||
Other long-term liabilities |
30,204 | 26,609 | ||||||
Deferred tax liabilities |
86,432 | 93,239 | ||||||
Total liabilities |
896,237 | 943,831 | ||||||
Commitments and contingencies |
||||||||
Mezzanine equity |
||||||||
Preferred stock: Authorized 10,000,000 shares; $0.001 par value; 805,000 and 0 issued and outstanding; 5.5%/8.5% dividend rate |
77,719 | - | ||||||
Stockholders' equity |
||||||||
Common stock: Authorized 40,000,000 shares; $0.001 par value; 17,081,535 and 16,870,285 issued and outstanding (including treasury shares) |
17 | 17 | ||||||
Additional paid-in capital |
270,027 | 261,155 | ||||||
Accumulated deficit |
(495 | ) | (13,366 | ) | ||||
Accumulated other comprehensive loss, net of tax |
(8,045 | ) | (8,756 | ) | ||||
Treasury shares, at cost, 1,029,557 and 1,014,108 shares |
(18,420 | ) | (17,686 | ) | ||||
Total Providence stockholders' equity |
243,084 | 221,364 | ||||||
Non-controlling interest |
4 | 50 | ||||||
Total stockholders' equity |
243,088 | 221,414 | ||||||
Total liabilities and stockholders' equity |
$ | 1,217,044 | $ | 1,165,245 |
--more--
Providence Service Corporation
Page 7
The Providence Service Corporation
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Six months ended June 30, |
||||||||
2015 |
2014 |
|||||||
Operating activities |
||||||||
Net income |
$ | 12,871 | $ | 12,959 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation |
10,165 | 4,908 | ||||||
Amortization |
19,692 | 3,963 | ||||||
Provision for doubtful accounts |
1,369 | 1,089 | ||||||
Stock based compensation |
6,058 | 1,400 | ||||||
Deferred income taxes |
(4,815 | ) | 207 | |||||
Amortization of deferred financing costs |
1,071 | 410 | ||||||
Excess tax benefit upon exercise of stock options |
(2,239 | ) | (2,346 | ) | ||||
Loss on equity investments |
3,542 | - | ||||||
Other non-cash charges |
(225 | ) | (40 | ) | ||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(60,908 | ) | (21,736 | ) | ||||
Other receivables |
(2,617 | ) | 487 | |||||
Restricted cash |
69 | 205 | ||||||
Prepaid expenses and other |
(12,234 | ) | (4,544 | ) | ||||
Reinsurance liability reserve |
9,691 | 4,648 | ||||||
Accounts payable and accrued expenses |
17,755 | 7,172 | ||||||
Accrued transportation costs |
6,022 | 13,554 | ||||||
Deferred revenue |
14,555 | (52 | ) | |||||
Other long-term liabilities |
281 | (4,009 | ) | |||||
Net cash provided by operating activities |
20,103 | 18,275 | ||||||
Investing activities |
||||||||
Purchase of property and equipment |
(13,122 | ) | (8,267 | ) | ||||
Acquisitions, net of cash acquired |
(1,665 | ) | (59,666 | ) | ||||
Equity investments |
(10,284 | ) | - | |||||
Net decrease in short-term investments |
(9 | ) | (9 | ) | ||||
Restricted cash for reinsured claims losses |
(413 | ) | (4,744 | ) | ||||
Net cash used in investing activities |
(25,493 | ) | (72,686 | ) | ||||
Financing activities |
||||||||
Proceeds from issuance of preferred stock, net of issuance costs |
80,667 | - | ||||||
Preferred stock dividends |
(1,698 | ) | - | |||||
Repurchase of common stock, for treasury |
(734 | ) | (501 | ) | ||||
Proceeds from common stock issued pursuant to stock option exercise |
2,377 | 9,150 | ||||||
Excess tax benefit upon exercise of stock options |
2,239 | 2,346 | ||||||
Proceeds from long-term debt |
- | 115,000 | ||||||
Repayment of long-term debt |
(87,125 | ) | (47,500 | ) | ||||
Payment of contingent consideration |
(7,496 | ) | - | |||||
Debt financing costs |
(30 | ) | (700 | ) | ||||
Other |
(46 | ) | (8 | ) | ||||
Net cash (used in) provided by financing activities |
(11,846 | ) | 77,787 | |||||
Effect of exchange rate changes on cash |
1,991 | 629 | ||||||
Net change in cash |
(15,245 | ) | 24,005 | |||||
Cash at beginning of period |
160,406 | 98,995 | ||||||
Cash at end of period |
$ | 145,161 | $ | 123,000 |
--more--
Providence Service Corporation
Page 8
The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA
(in thousands)
(Unaudited)
Three Months Ended June 30, 2015 |
||||||||||||||||||||||||
NET Services |
Human Services |
WD Services |
HA Services |
Corporate and Other |
Total |
|||||||||||||||||||
Net income |
$ | 11,693 | $ | 2,804 | $ | (1,905 | ) | $ | 3,749 | $ | (9,707 | ) | $ | 6,634 | ||||||||||
Interest expense, net |
- | (9 | ) | (43 | ) | (5 | ) | 4,602 | 4,545 | |||||||||||||||
Provision for income taxes |
7,183 | 1,992 | (786 | ) | 2,522 | (2,515 | ) | 8,396 | ||||||||||||||||
Depreciation and amortization |
2,329 | 1,767 | 3,332 | 7,185 | 344 | 14,957 | ||||||||||||||||||
EBITDA |
21,205 | 6,554 | 598 | 13,451 | (7,276 | ) | 34,532 | |||||||||||||||||
Ingeus acquisition related equity compensation |
- | - | 1,524 | - | - | 1,524 | ||||||||||||||||||
Gain on foreign currency translation |
- | - | (714 | ) | - | - | (714 | ) | ||||||||||||||||
Charges related to the separation of an executive officer, net |
- | - | - | - | 695 | 695 | ||||||||||||||||||
Adjusted EBITDA |
$ | 21,205 | $ | 6,554 | $ | 1,408 | $ | 13,451 | $ | (6,581 | ) | $ | 36,037 |
Three Months Ended June 30, 2014 |
||||||||||||||||||||||||
NET Services |
Human Services |
WD Services |
HA Services |
Corporate and Other |
Total |
|||||||||||||||||||
Net income |
$ | 9,545 | $ | 1,182 | $ | 2,321 | $ | - | $ | (6,376 | ) | $ | 6,672 | |||||||||||
Interest expense, net |
(2 | ) | (8 | ) | (228 | ) | - | 1,499 | 1,261 | |||||||||||||||
Provision for income taxes |
6,381 | 876 | 503 | - | (2,230 | ) | 5,530 | |||||||||||||||||
Depreciation and amortization |
1,865 | 1,745 | 1,261 | - | 272 | 5,143 | ||||||||||||||||||
EBITDA |
17,789 | 3,795 | 3,857 | - | (6,835 | ) | 18,606 | |||||||||||||||||
Acquisition costs |
- | - | - | - | 2,496 | 2,496 | ||||||||||||||||||
Integration and restructuring charges |
- | 15 | 732 | - | 97 | 844 | ||||||||||||||||||
Ingeus acquisition related equity compensation |
- | - | 486 | - | - | 486 | ||||||||||||||||||
Loss on foreign currency translation |
- | - | 54 | - | 7 | 61 | ||||||||||||||||||
Adjusted EBITDA |
$ | 17,789 | $ | 3,810 | $ | 5,129 | $ | - | $ | (4,235 | ) | $ | 22,493 |
--more--
Providence Service Corporation
Page 9
The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA
(in thousands)
(Unaudited)
Six Months Ended June 30, 2015 |
||||||||||||||||||||||||
NET Services |
Human Services |
WD Services |
HA Services |
Corporate and Other |
Total |
|||||||||||||||||||
Net income |
$ | 24,305 | $ | 3,840 | $ | (4,286 | ) | $ | 7,595 | $ | (18,583 | ) | $ | 12,871 | ||||||||||
Interest expense, net |
(1 | ) | (29 | ) | (58 | ) | (9 | ) | 10,649 | 10,552 | ||||||||||||||
Provision for income taxes |
15,312 | 2,798 | 1,640 | 5,193 | (9,250 | ) | 15,693 | |||||||||||||||||
Depreciation and amortization |
4,606 | 3,614 | 6,648 | 14,367 | 622 | 29,857 | ||||||||||||||||||
EBITDA |
44,222 | 10,223 | 3,944 | 27,146 | (16,562 | ) | 68,973 | |||||||||||||||||
Ingeus acquisition related equity compensation |
- | - | 3,057 | - | - | 3,057 | ||||||||||||||||||
Gain on foreign currency translation |
- | - | (395 | ) | - | - | (395 | ) | ||||||||||||||||
Charges related to the separation of an executive officer, net |
- | - | - | - | 695 | 695 | ||||||||||||||||||
Adjusted EBITDA |
$ | 44,222 | $ | 10,223 | $ | 6,606 | $ | 27,146 | $ | (15,867 | ) | $ | 72,330 |
Six Months Ended June 30, 2014 |
||||||||||||||||||||||||
NET Services |
Human Services |
WD Services |
HA Services |
Corporate and Other |
Total |
|||||||||||||||||||
Net income |
$ | 20,954 | $ | 380 | $ | 2,530 | $ | - | $ | (10,905 | ) | $ | 12,959 | |||||||||||
Interest expense, net |
(6 | ) | (20 | ) | (243 | ) | - | 3,115 | 2,846 | |||||||||||||||
Provision for income taxes |
14,114 | 369 | 660 | - | (5,405 | ) | 9,738 | |||||||||||||||||
Depreciation and amortization |
3,626 | 3,324 | 1,392 | - | 529 | 8,871 | ||||||||||||||||||
EBITDA |
38,688 | 4,053 | 4,339 | - | (12,666 | ) | 34,414 | |||||||||||||||||
Acquisition costs |
- | - | - | - | 4,325 | 4,325 | ||||||||||||||||||
Integration and restructuring costs |
- | 29 | 732 | - | 97 | 858 | ||||||||||||||||||
Ingeus acquisition related equity compensation |
- | - | 486 | - | - | 486 | ||||||||||||||||||
Loss on foreign currency translation |
- | - | 95 | - | 6 | 101 | ||||||||||||||||||
Charges related to the separation of an executive officer, net |
- | 511 | - | - | - | 511 | ||||||||||||||||||
Adjusted EBITDA |
$ | 38,688 | $ | 4,593 | $ | 5,652 | $ | - | $ | (8,238 | ) | $ | 40,695 |
Providence Service Corporation
Page 10
The Providence Service Corporation
Adjusted Earnings Per Share
(in thousands, except share and per share data)
(Unaudited)
Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
2015 |
2014 |
2015 |
2014 |
|||||||||||||
Net income |
$ | 6,634 | $ | 6,672 | $ | 12,871 | $ | 12,959 | ||||||||
Acquisition costs |
- | 2,496 | - | 4,325 | ||||||||||||
Integration and restructuring costs |
- | 844 | - | 858 | ||||||||||||
Ingeus acquisition related equity compensation |
1,524 | 486 | 3,057 | 486 | ||||||||||||
(Gain) Loss on foreign currency translation |
(714 | ) | 61 | (395 | ) | 101 | ||||||||||
Payments related to separation arrangements with certain former executive officers, net |
695 | - | 695 | 511 | ||||||||||||
Intangible amortization expense |
9,881 | 2,338 | 19,692 | 3,963 | ||||||||||||
Tax effected impact of adjustments |
(3,927 | ) | (2,157 | ) | (7,754 | ) | (3,759 | ) | ||||||||
Adjusted net income |
14,093 | 10,740 | 28,166 | 19,444 | ||||||||||||
Dividends on preferred stock |
(1,104 | ) | - | (1,698 | ) | - | ||||||||||
Amortization of preferred stock discount |
(825 | ) | - | (1,071 | ) | - | ||||||||||
Income allocated to participating securities |
(1,355 | ) | - | (2,159 | ) | - | ||||||||||
Adjusted net income available to common stockholders, diluted |
10,809 | 10,740 | 23,238 | 19,444 | ||||||||||||
Adjusted diluted earnings per common share |
$ | 0.67 | $ | 0.74 | $ | 1.44 | $ | 1.36 | ||||||||
Diluted weighted-average number of common shares outstanding |
16,240,898 | 14,453,964 | 16,193,372 | 14,306,898 |
--more--
Providence Service Corporation
Page 11
The Providence Service Corporation
Segment Information
(in thousands)
(Unaudited)
Three Months Ended June 30, 2015 |
||||||||||||||||||||||||
NET Services |
Human Services |
WD Services |
HA Services |
Corporate and Other |
Total |
|||||||||||||||||||
Revenues |
$ | 270,690 | $ | 90,222 | $ | 92,175 | $ | 55,404 | $ | (240 | ) | $ | 508,251 | |||||||||||
Operating income (loss) |
18,876 | 4,787 | (2,389 | ) | 6,266 | (7,620 | ) | 19,920 | ||||||||||||||||
Depreciation and amortization |
2,329 | 1,767 | 3,332 | 7,185 | 344 | 14,957 | ||||||||||||||||||
Net Income |
11,693 | 2,804 | (1,905 | ) | 3,749 | (9,707 | ) | 6,634 | ||||||||||||||||
Adjusted EBITDA (Non-GAAP) |
21,205 | 6,554 | 1,408 | 13,451 | (6,581 | ) | 36,037 | |||||||||||||||||
Three Months Ended June 30, 2014 |
||||||||||||||||||||||||
NET Services |
Human Services |
WD Services |
HA Services |
Corporate and Other |
Total |
|||||||||||||||||||
Revenues |
$ | 216,296 | $ | 91,333 | $ | 36,617 | $ | - | $ | (293 | ) | $ | 343,953 | |||||||||||
Operating income (loss) |
15,925 | 2,049 | 2,649 | - | (7,099 | ) | 13,524 | |||||||||||||||||
Depreciation and amortization |
1,865 | 1,745 | 1,261 | - | 272 | 5,143 | ||||||||||||||||||
Net Income |
9,545 | 1,182 | 2,321 | - | (6,376 | ) | 6,672 | |||||||||||||||||
Adjusted EBITDA (Non-GAAP) |
17,789 | 3,810 | 5,129 | - | (4,235 | ) | 22,493 | |||||||||||||||||
Six Months Ended June 30, 2015 |
||||||||||||||||||||||||
NET Services |
Human Services |
WD Services |
HA Services |
Corporate and Other |
Total |
|||||||||||||||||||
Revenues |
$ | 525,450 | $ | 176,409 | $ | 199,793 | $ | 112,836 | $ | (442 | ) | $ | 1,014,046 | |||||||||||
Operating income (loss) |
39,615 | 6,607 | 444 | 12,781 | (17,184 | ) | 42,263 | |||||||||||||||||
Depreciation and amortization |
4,606 | 3,614 | 6,648 | 14,367 | 622 | 29,857 | ||||||||||||||||||
Net Income |
24,305 | 3,840 | (4,286 | ) | 7,595 | (18,583 | ) | 12,871 | ||||||||||||||||
Adjusted EBITDA (Non-GAAP) |
44,222 | 10,223 | 6,606 | 27,146 | (15,867 | ) | 72,330 | |||||||||||||||||
Six Months Ended June 30, 2014 |
||||||||||||||||||||||||
NET Services |
Human Services |
WD Services |
HA Services |
Corporate and Other |
Total |
|||||||||||||||||||
Revenues |
$ | 414,373 | $ | 175,435 | $ | 44,065 | $ | - | $ | (517 | ) | $ | 633,356 | |||||||||||
Operating income (loss) |
35,061 | 729 | 3,043 | - | (13,189 | ) | 25,644 | |||||||||||||||||
Depreciation and amortization |
3,626 | 3,324 | 1,392 | - | 529 | 8,871 | ||||||||||||||||||
Net Income |
20,954 | 380 | 2,530 | - | (10,905 | ) | 12,959 | |||||||||||||||||
Adjusted EBITDA (Non-GAAP) |
38,688 | 4,593 | 5,652 | - | (8,238 | ) | 40,695 |
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