EX-99.1 2 ex99-1.htm EXHIBIT 99.1 ex99-1.htm

Exhibit 99.1

 

 

 

AT THE COMPANY

AT CAMERON ASSOCIATES

David Shackelton – Chief Financial Officer

Alison Ziegler     212/554-5469

520/747-6600

 

 

FOR IMMEDIATE RELEASE

 

Providence Service Corporation Reports Third Quarter 2015 Results and Announces Share Repurchase Program

 

Third Quarter 2015 Financial Highlights:

 

Revenue from continuing operations of $432.5 million

 

Net loss available to common shareholders from continuing operations of $4.9 million, or $0.30 per diluted share

 

Adjusted net income available to common shareholders from continuing operations (non-GAAP) of $1.2 million, or $0.07 per diluted share

 

Adjusted EBITDA from continuing operations (non-GAAP) of $16.4 million

 

 

TUCSON, ARIZONA November 9, 2015 – The Providence Service Corporation (Nasdaq: PRSC) today announced its financial results for the third quarter and nine months ended September 30, 2015 as well as a share repurchase program. Included in the results are the operations of Ingeus and Matrix Medical Network beginning on May 31, 2014 and October 24, 2014, respectively. Additionally, due to the sale of the Human Services segment, effective November 1, 2015, the results of the Human Services segment have been classified as discontinued operations.

 

Third Quarter 2015 Results

For the third quarter of 2015, the Company reported consolidated revenue from continuing operations of $432.5 million, an increase of 39.7% from $309.5 million in the comparable period of 2014. The third quarter 2015 results included $52.9 million of revenue contributed by Matrix. Excluding revenue attributable to Matrix, consolidated revenue from continuing operations was $379.6 million in the third quarter of 2015, an increase of 22.6% from the comparable period of 2014.

 

Service expense from continuing operations as a percentage of revenue was 90.4% in the third quarter of 2015 compared to 90.6% in the third quarter of 2014. Service expense from continuing operations in the third quarter of 2015 was reduced by $1.8 million due to a favorable actuarial adjustment related to self-insured professional liability claims. General and administrative (G&A) expense from continuing operations as a percentage of revenue was 4.9% in the third quarter of 2015 compared to 6.6% in the third quarter of 2014. The Company reported a loss on equity investment of $4.5 million in the third quarter of 2015 related to the Company’s investment in Mission Providence, a joint venture in Australia, which continued to incur start-up costs during the third quarter of 2015.

 

The Company reported a net loss available to common shareholders from continuing operations of $4.9 million, or $0.30 per diluted common share in the third quarter of 2015 compared to net income available to common shareholders from continuing operations of $1.3 million, or $0.08 per diluted common share, in the prior year period. Adjusted net income available to common shareholders from continuing operations (non-GAAP) in the third quarter of 2015 was $1.2 million, or $0.07 per diluted common share, versus third quarter 2014 adjusted net income available to common shareholders from continuing operations (non-GAAP) of $7.3 million, or $0.48 per diluted common share. A reconciliation of net income available to common shareholders from continuing operations to adjusted net income available to common shareholders from continuing operations (non-GAAP) and the calculation of adjusted diluted earnings per common share from continuing operations are presented below.

 

Adjusted EBITDA from continuing operations (non-GAAP) for the third quarter of 2015 was $16.4 million compared to $14.6 million in the same period last year. Adjusted EBITDA from continuing operations for the third quarter of 2015 includes a negative EBITDA impact of $5.3 million related to the Company’s investment in Mission Providence (beginning in the third quarter of 2015, the Company began excluding the taxes, depreciation, and amortization associated with its joint venture investment in Mission Providence from the calculation of adjusted EBITDA and the Company has updated the 2014 presentation to be consistent with this change). A reconciliation of net income to EBITDA and Adjusted EBITDA is presented below.

 

 
 

 

 

James Lindstrom, Chief Executive Officer, stated, “We remain pleased with the continued solid operational performance of our three continuing verticals. The year-over-year revenue growth experienced in the first half of 2015 continued into the third quarter due to multiple new contracts in NET Services and programs in WD Services. In our HA services segment, as expected, revenue in the third quarter declined versus prior year pro forma results due to volumes being more evenly spread across the entire year as opposed to the higher level of volume concentration in the second half of 2014. Also as anticipated, margins contracted in the third quarter of 2015 versus prior year primarily due to significant upfront operating cost outlays associated with new WD Services programs.”

 

Year to Date 2015 Results

For the first nine months of 2015, the Company reported consolidated revenue from continuing operations of $1.3 billion, an increase of 65.5% from $767.9 million in the comparable period of 2014. The 2015 results included $447.3 million of revenue contributed by Ingeus and Matrix during the first nine months of 2015. The first nine months of 2014 included $105.0 million in revenue from Ingeus. Excluding revenue attributable to these acquired businesses from both periods, consolidated revenue from continuing operations was $823.2 million, an increase of 24.2% from the comparable period of 2014.

 

Service expense from continuing operations as a percentage of revenue was 88.9% in the first nine months of 2015 compared to 90.0% in the first nine months of 2014. For the nine months ended September 30, 2015 and 2014, service expense from continuing operations included a $4.5 million and $1.9 million charge, respectively, related to the amortization of the fair value of restricted stock awards issued in connection with the acquisition of Ingeus. Service expense from continuing operations in the first nine months of 2015 was reduced by $1.8 million due to a favorable actuarial adjustment related to self-insured professional liability claims. G&A expense from continuing operations as a percentage of revenue from continuing operations was 4.7% in the first nine months of 2015 compared to 5.3% in the first nine months of 2014. The Company also reported a loss on equity investment of $8.0 million during the nine months ended September 30, 2015 related to the Company’s investment in Mission Providence, a joint venture in Australia, which incurred significant start-up costs during the first nine months of 2015.

 

The Company reported net income available to common shareholders from continuing operations of $2.8 million, or $0.17 per diluted common share, for the nine months ended September 30, 2015 compared to net income available to common shareholders from continuing operations of $12.6 million, or $0.85 per diluted common share, in the prior year period. Adjusted net income available to common shareholders from continuing operations (non-GAAP) in the first nine months of 2015 was $21.3 million, or $1.31 per diluted common share, versus first nine months of 2014 adjusted net income available to common shareholders from continuing operations (non-GAAP) of $23.9 million, or $1.62 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 are presented below.

 

Adjusted EBITDA from continuing operations (non-GAAP) for the nine months ended September 30, 2015 was $77.5 million compared to $48.7 million in the same period last year. Adjusted EBITDA from continuing operations for the nine months ending September 30, 2015 includes a negative EBITDA impact of $10.2 million related to the Company’s investment in Mission Providence (beginning in the third quarter of 2015, the Company began excluding the taxes, depreciation, and amortization associated with its joint venture investment in Mission Providence from the calculation of adjusted EBITDA and the Company has updated the year-to-date 2015 presentation to be consistent with this change). A reconciliation of net income to EBITDA and Adjusted EBITDA is presented below.

 

Overview of Share Repurchase Program

Providence’s Board of Directors has approved a new stock repurchase program for up to $70.0 million of its common stock over the next 12 months. Acquisitions under the stock repurchase program may be made from time to time through a combination of open market repurchases (including through Rule 10b5-1 plans), privately negotiated transactions, accelerated share repurchase transactions, and/or other derivative transactions, at the Company's discretion, as permitted by securities laws, covenants under existing bank agreements and other legal requirements, and subject to market conditions and other factors. The repurchase plan may be suspended or discontinued at any time.

 

 
 

 

 

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 three continuing segments for the three and nine month periods ended September 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. 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. Additionally, beginning in the third quarter of 2015, the Company began excluding the taxes, depreciation, and amortization associated with its joint venture investment in Mission Providence from the calculation of adjusted EBITDA. Previously, the impact of Mission Providence to WD Service’s Adjusted EBITDA was equal to the equity investment line on the Company’s Statement of Income. Previous periods’ Adjusted EBITDA have been updated to be consistent with this new treatment of the Company’s joint venture investment in Mission Providence.

 

Non-emergency Transportation (NET) Services

Revenue from the NET Services segment increased 22.6% to $277.1 million in the third quarter of 2015 from $226.1 million in the prior year period. Service expense for the segment increased to $257.5 million, or 92.9% of NET Services revenue, in the third quarter of 2015 compared to $206.5 million, or 91.3% of NET Services revenue, in the third quarter of 2014. NET Services operating income decreased 7.9% to $14.3 million in the third quarter of 2015 from $15.5 million in the prior year period. NET Services Adjusted EBITDA (non-GAAP) decreased $0.8 million, or 4.3%, to $16.7 million in the third quarter of 2015 from $17.5 million in the prior year period.

 

In the first nine months of 2015, revenue from the NET Services segment increased 25.3% to $802.6 million from $640.4 million in the prior year period. Service expense for the segment increased to $733.7 million, or 91.4% of NET Services revenue, in the first nine months of 2015 compared to $578.2 million, or 90.3% of NET Services revenue, in the first nine months of 2014. NET Services operating income increased 6.6% to $53.9 million in the first nine months of 2015 from $50.6 million in the prior year period. NET Services Adjusted EBITDA (non-GAAP) increased $4.8 million, or 8.5%, to $60.9 million in the first nine months of 2015 from $56.2 million in the prior year period.

 

Revenue for the NET Services segment was favorably impacted by new contracts and increased membership in California, Rhode Island, Michigan, Maine, Illinois, Louisiana and Texas, among other states. 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.

 

Workforce Development (WD) Services

WD Services revenue increased 22.7% to $102.5 million in the third quarter of 2015 from $83.6 million in the prior year period. Service expense for the segment increased to $95.9 million, or 93.6% of WD revenue, in the third quarter of 2015 compared to $73.2 million, or 87.5% of WD Services revenue, in the prior year period. WD Services operating loss was $5.1 million in the third quarter of 2015 compared to operating income of $0.6 million in the prior year period. WD Services Adjusted EBITDA (non-GAAP) was negative $5.5 million in the third quarter of 2015 compared to $6.2 million in the prior year period. For the third quarter of 2015, WD Service’s Adjusted EBITDA included a negative EBITDA impact of $5.3 million related to the Company’s investment in Mission Providence.

 

In the first nine months of 2015, WD Services revenue was $302.3 million. In the first nine months of 2014, WD Services revenue was $127.7 million and represents the legacy workforce development services business that had historically been part of Human Services as well as four months of operations of Ingeus. Service expense for the segment was $273.4 million, or 90.4% of WD revenue, in the first nine months of 2015 compared to $110.1 million, or 86.2% of WD Services revenue in the prior year period. For the first nine months of 2015 and 2014, WD Services service expense included a $4.5 million and $1.9 million charge, respectively, related to the amortization of the fair value of restricted stock awards issued in connection with the acquisition of Ingeus. WD Services operating loss was $4.6 million for the first nine months of 2015 compared to operating income of $3.6 million in the prior year period. WD Services Adjusted EBITDA (non-GAAP) was negative $0.2 million in the first nine months of 2015 compared to $11.8 million in the prior year period. For the first nine months of 2015, WD Service’s Adjusted EBITDA and included a negative EBITDA impact of $10.2 million related to Mission Providence.

 

The increase in WD Services revenue in the third quarter of 2015 compared to the prior year period was primarily due to a new rehabilitation and justice program that began in 2015, which was partially offset by declining referrals and reduced unit pricing under the segment’s primary employability program in the United Kingdom. Service expense increased as a percentage of revenue in the third quarter of 2015 compared to the prior year period as a result of the upfront operating costs associated with new programs, primarily the new rehabilitation and justice program.

 

Health Assessment (HA) Services

HA Services revenue was $52.9 million in the third quarter of 2015 and is comprised of revenue from Matrix, acquired on October 23, 2014. Service expense for the segment was $40.1 million, or 75.9% of HA Services revenue. HA Services operating income was $4.5 million in the third quarter of 2015, and HA Services Adjusted EBITDA (non-GAAP) was $11.9 million for the same period.

 

 
 

 

 

In the first nine months of 2015, HA Services revenue was $165.7 million. Service expense for the segment was $124.5 million, or 75.2% of HA Services revenue. HA Services operating income was $17.2 million in the first nine months of 2015, and HA Services Adjusted EBITDA (non-GAAP) was $39.1 million for the same period.

 

Conference Call

Providence will hold a conference call at 11:00 a.m. EST (9:00 a.m. MST) Tuesday, November 10, 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.prscholdings.com. The call is also available by dialing (855) 548-8661, or for international callers (412) 455-6143, and by using the passcode 60084396. A replay of the teleconference will be available on http://investor.prscholdings.com. A replay will also be available until November 17, 2015 by dialing (855) 859-2056 or (404) 537-3406 and using passcode 60084396.

 

About Providence

The Providence Service Corporation provides and manages multiple healthcare and social services, comprised of non-emergency transportation services, workforce development services, legal offender rehabilitation services, and health assessment services in the United States and abroad. For more information, please visit prscholdings.com.

 

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

   

Nine months ended

 
   

September 30,

   

September 30,

 
   

2015

   

2014

   

2015

   

2014

 
                                 

Service revenue, net

  $ 432,450     $ 309,474     $ 1,270,517     $ 767,902  
                                 

Operating expenses:

                               

Service expense

    390,878       280,444       1,128,984       690,752  

General and administrative expense

    21,324       20,326       59,084       40,439  

Depreciation and amortization

    13,370       6,256       39,614       11,805  

Total operating expenses

    425,572       307,026       1,227,682       742,996  

Operating income

    6,878       2,448       42,835       24,906  
                                 

Other expenses:

                               

Interest expense, net

    3,809       795       12,734       3,439  

Loss on equity investment

    4,465       -       8,008       -  

Gain on foreign currency translation

    (736 )     (164 )     (1,131 )     (63 )

Income (loss) from continuing operations before income taxes

    (660 )     1,817       23,224       21,530  

Provision for income taxes

    3,120       565       16,267       8,966  

Income (loss) from continuing operations, net of tax

    (3,780 )     1,252       6,957       12,564  

Discontinued operations, net of tax

    (1,791 )     (986 )     342       660  

Net income (loss)

  $ (5,571 )   $ 266     $ 7,299     $ 13,224  
                                 

Net income (loss) available to common stockholders

  $ (6,687 )   $ 266     $ 3,093     $ 13,224  
                                 

Basic earnings (loss) per common share:

                               

Continuing operations

  $ (0.30 )   $ 0.08     $ 0.17     $ 0.87  

Discontinued operations

    (0.11 )     (0.06 )     0.02       0.05  

Basic earnings (loss) per common share

  $ (0.41 )   $ 0.02     $ 0.19     $ 0.92  
                                 

Diluted earnings (loss) per common share:

                               

Continuing operations

  $ (0.30 )   $ 0.08     $ 0.17     $ 0.85  

Discontinued operations

    (0.11 )     (0.06 )     0.02       0.05  

Diluted earnings (loss) per common share

  $ (0.41 )   $ 0.02     $ 0.19     $ 0.90  
                                 

Weighted-average number of common shares outstanding:

                               

Basic

    16,130,421       14,955,773       16,068,455       14,450,248  

Diluted

    16,130,421       15,176,105       16,220,747       14,723,360  

 

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Providence Service Corporation

Page 6

 

The Providence Service Corporation

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

 

   

September 30,

   

December 31,

 
   

2015

   

2014

 

Assets

 

(Unaudited)

         

Current assets:

               

Cash and cash equivalents

  $ 106,724     $ 135,258  

Accounts receivable, net of allowance of $5,665 in 2015 and $2,735 in 2014

    186,038       107,565  

Other receivables

    10,242       5,314  

Prepaid expenses and other

    30,045       43,134  

Restricted cash

    3,897       3,234  

Deferred tax assets

    1,859       4,148  

Current assets of discontinued operations held for sale

    75,854       75,993  

Total current assets

    414,659       374,646  

Property and equipment, net

    51,349       42,648  

Goodwill

    340,854       342,297  

Intangible assets, net

    295,602       323,904  

Other assets

    29,713       18,812  

Restricted cash, less current portion

    15,553       14,764  

Non-current assets of discontinued operations held for sale

    48,823       51,863  

Total assets

  $ 1,196,553     $ 1,168,934  

Liabilities and stockholders' equity

               

Current liabilities:

               

Current portion of long-term obligations

  $ 31,000     $ 24,588  

Note payable to related party

    -       65,500  

Accounts payable

    31,961       46,557  

Accrued expenses

    105,681       99,273  

Accrued transportation costs

    79,118       55,492  

Deferred revenue

    28,140       10,743  

Reinsurance liability reserve

    15,337       11,077  

Current liabilities of discontinued operations held for sale

    24,222       26,228  

Total current liabilities

    315,459       339,458  

Long-term obligations, less current portion

    451,035       484,525  

Other long-term liabilities

    27,509       25,974  

Deferred tax liabilities

    88,765       96,928  

Non-current liabilities of discontinued operations held for sale

    854       635  

Total liabilities

    883,622       947,520  

Mezzanine equity

               

Convertible preferred stock, net: 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; 17,136,574 and 16,870,285 issued and outstanding (including treasury shares)

    17       17  

Additional paid-in capital

    273,862       261,155  

Accumulated deficit

    (6,067 )     (13,366 )

Accumulated other comprehensive loss, net of tax

    (14,335 )     (8,756 )

Treasury shares, at cost, 1,029,638 and 1,014,108 shares

    (18,424 )     (17,686 )

Total Providence stockholders' equity

    235,053       221,364  

Non-controlling interest

    159       50  

Total stockholders' equity

    235,212       221,414  

Total liabilities and stockholders' equity

  $ 1,196,553     $ 1,168,934  

 

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Providence Service Corporation

Page 7

 

The Providence Service Corporation

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

 

   

Nine months ended September 30,

 
   

2015

   

2014

 

Operating activities

               

Net income

  $ 7,299     $ 13,224  

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

               

Depreciation

    15,287       8,938  

Amortization

    29,157       7,968  

Provision for doubtful accounts

    2,018       1,770  

Stock based compensation

    8,822       5,375  

Deferred income taxes

    (7,811 )     (3,814 )

Amortization of deferred financing costs

    1,611       607  

Excess tax benefit upon exercise of stock options

    (2,364 )     (2,835 )

Asset impairment charge

    1,593       -  

Loss on equity investment

    8,008       -  

Other non-cash charges

    (433 )     (465 )

Changes in operating assets and liabilities:

               

Accounts receivable

    (87,823 )     (17,296 )

Other receivables

    1,177       1,470  

Restricted cash

    43       168  

Prepaid expenses and other

    12,719       85  

Reinsurance liability reserve

    5,174       3,995  

Accounts payable and accrued expenses

    (10,556 )     13,475  

Accrued transportation costs

    23,626       6,328  

Deferred revenue

    17,896       628  

Other long-term liabilities

    248       (5,249 )

Net cash provided by operating activities

    25,691       34,372  

Investing activities

               

Purchase of property and equipment

    (23,834 )     (11,623 )

Acquisition of businesses, net of cash acquired

    (3,433 )     (59,666 )

Equity investments

    (13,785 )     -  

Net increase in short-term investments

    (14 )     (14 )

Restricted cash for reinsured claims losses

    (1,452 )     (3,812 )

Net cash used in investing activities

    (42,518 )     (75,115 )

Financing activities

               

Proceeds from issuance of preferred stock, net of issuance costs

    80,667       -  

Preferred stock dividends

    (2,814 )     -  

Repurchase of common stock, for treasury

    (738 )     (501 )

Proceeds from common stock issued pursuant to stock option exercise

    4,490       10,880  

Excess tax benefit upon exercise of stock options

    2,364       2,835  

Proceeds from long-term debt

    -       115,000  

Repayment of long-term debt

    (92,938 )     (47,500 )

Payment of contingent consideration

    (7,496 )     -  

Debt financing costs

    (287 )     (728 )

Other

    113       36  

Net cash (used in) provided by financing activities

    (16,639 )     80,022  

Effect of exchange rate changes on cash

    (463 )     (1,376 )

Net change in cash

    (33,929 )     37,903  

Cash at beginning of period

    160,406       98,995  

Cash at end of period

  $ 126,477     $ 136,898  

 

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Providence Service Corporation

Page 8

 

 

The Providence Service Corporation

Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA

(in thousands)

(Unaudited)

 

   

Three Months Ended September 30, 2015

 
   

NET Services

   

WD Services

   

HA Services

   

Corporate and Other

   

Total Continuing Operations

   

Discontinued Operations

   

Total

 
                                                         

Net income

  $ 9,046     $ (9,166 )   $ 2,618     $ (6,278 )   $ (3,780 )   $ (1,791 )   $ (5,571 )
                                                         

Interest expense, net

    -       (34 )     (5 )     3,848       3,809       795       4,604  

Provision for income taxes

    5,269       383       1,844       (4,376 )     3,120       (1,789 )     1,331  

Depreciation and amortization

    2,389       3,441       7,488       52       13,370       1,217       14,587  

EBITDA

    16,704       (5,376 )     11,945       (6,754 )     16,519       (1,568 )     14,951  
                                                         

Acquisition related equity compensation

    -       1,473       -       -       1,473       -       1,473  

Transaction Expenses

    -       -       -       -       -       1,818       1,818  

Impairment

    -       -       -       -       -       1,593       1,593  

Gain on foreign currency translation

    -       (736 )     -       -       (736 )     -       (736 )

Income taxes, depreciation and amortization in loss on equity investment

    -       (862 )     -       -       (862 )     -       (862 )

Adjusted EBITDA

  $ 16,704     $ (5,501 )   $ 11,945     $ (6,754 )   $ 16,394     $ 1,843     $ 18,237  

 

 

   

Three Months Ended September 30, 2014

 
   

NET Services

   

WD Services

   

HA Services

   

Corporate and Other

   

Total Continuing Operations

   

Discontinued Operations

   

Total

 
                                                         

Net income

  $ 10,204     $ 331     $ -     $ (9,283 )   $ 1,252     $ (986 )   $ 266  
                                                         

Interest expense, net

    (1 )     (58 )     -       854       795       578       1,373  

Provision for income taxes

    5,334       376       -       (5,145 )     565       (367 )     198  

Depreciation and amortization

    1,926       4,050       -       280       6,256       1,778       8,034  

EBITDA

    17,463       4,699       -       (13,294 )     8,868       1,003       9,871  
                                                         

Acquisition costs

    -       -       -       3,685       3,685       -       3,685  

Integration and restructuring charges

    -       155       -       600       755       148       903  

Acquisition related equity compensation

    -       1,439       -       -       1,439       -       1,439  

Loss on foreign currency translation

    -       (96 )     -       (68 )     (164 )     -       (164 )

Adjusted EBITDA

  $ 17,463     $ 6,197     $ -     $ (9,077 )   $ 14,583     $ 1,151     $ 15,734  

 

--more--

 

 
 

 

 

Providence Service Corporation

Page 9

  

 

The Providence Service Corporation

Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA

(in thousands)

(Unaudited)

 

   

Nine Months Ended September 30, 2015

 
   

NET Services

   

WD Services

   

HA Services

   

Corporate and Other

   

Total from Continuing Operations

   

Discontinued Operations

   

Total

 
                                                         

Net income

  $ 33,350     $ (13,452 )   $ 10,213     $ (23,154 )   $ 6,957     $ 342     $ 7,299  
                                                         

Interest expense, net

    (2 )     (92 )     (13 )     12,841       12,734       2,422       15,156  

Provision for income taxes

    20,582       2,023       7,037       (13,375 )     16,267       756       17,023  

Depreciation and amortization

    6,995       10,089       21,855       675       39,614       4,831       44,445  

EBITDA

    60,925       (1,432 )     39,092       (23,013 )     75,572       8,351       83,923  
                                                         

Ingeus acquisition related equity compensation

    -       4,530       -       -       4,530       -       4,530  

Impairment

    -       -       -       -       -       1,593       1,593  

Transaction Expenses

    -       -       -       -       -       2,120       2,120  

Gain on foreign currency translation

    -       (1,131 )     -       -       (1,131 )     -       (1,131 )

Income taxes, depreciation and amortization in loss on equity investment

    -       (2,178 )     -       -       (2,178 )     -       (2,178 )

Charges related to the separation of an executive officer, net

    -       -       -       695       695       -       695  

Adjusted EBITDA

  $ 60,925     $ (211 )   $ 39,092     $ (22,318 )   $ 77,488     $ 12,064     $ 89,552  

 

 

   

Nine Months Ended September 30, 2014

 
   

NET Services

   

WD Services

   

HA Services

   

Corporate and Other

   

Total from Continuing Operations

   

Discontinued Operations

   

Total

 
                                                         

Net income

  $ 30,871     $ 2,859     $ -     $ (21,166 )   $ 12,564     $ 660     $ 13,224  
                                                         

Interest expense, net

    (8 )     (301 )     -       3,748       3,439       780       4,219  

Provision for income taxes

    19,735       1,036       -       (11,805 )     8,966       970       9,936  

Depreciation and amortization

    5,552       5,443       -       810       11,805       5,101       16,906  

EBITDA

    56,150       9,037       -       (28,413 )     36,774       7,511       44,285  
                                                         

Acquisition costs

    -       -       -       8,010       8,010       -       8,010  

Integration and restructuring charges

    -       887       -       697       1,584       177       1,761  

Ingeus acquisition related equity compensation

    -       1,925       -       -       1,925       -       1,925  

Loss on foreign currency translation

    -       (1 )     -       (62 )     (63 )     -       (63 )

Charges related to the separation of an executive officer, net

    -       -       -       511       511       -       511  

Adjusted EBITDA

  $ 56,150     $ 11,848     $ -     $ (19,257 )   $ 48,741     $ 7,688     $ 56,429  

 

 
 

 

 

Providence Service Corporation

Page 10

 

 

 

The Providence Service Corporation

Adjusted Earnings Per Share from Continuing Operations

(in thousands, except share and per share data)

(Unaudited)

 

   

Three months ended September 30,

   

Nine months ended September 30,

 
   

2015

   

2014

   

2015

   

2014

 
                                 

Net income (loss) from continuing operations

  $ (3,780 )   $ 1,252     $ 6,957     $ 12,564  
                                 

Acquisition costs

    -       3,685       -       8,010  

Integration and restructuring costs

    -       755       -       1,584  

Acquisition related equity compensation

    1,473       1,439       4,530       1,925  

Gain on foreign currency translation

    (736 )     (164 )     (1,131 )     (63 )

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

    -       -       695       511  

Intangible amortization expense

    8,692       3,047       26,448       5,170  

Tax effected impact of adjustments

    (3,166 )     (2,725 )     (10,146 )     (5,810 )

Adjusted net income from continuing operations

    2,483       7,289       27,353       23,891  
                                 

Dividends on convertible preferred stock

    (1,116 )     -       (2,814 )     -  

Less: Accretion of convertibe preferred stock discount

    -       -       (1,071 )     -  

Income allocated to participating securities

    (152 )     -       (2,207 )     -  
                                 

Adjusted net income available to common stockholders, diluted

  $ 1,215     $ 7,289     $ 21,261     $ 23,891  

 

--more--

 

 
 

 

 

Providence Service Corporation

Page 11

 

 

The Providence Service Corporation

Segment Information

(in thousands)

(Unaudited)

 

   

Three Months Ended September 30, 2015

 
   

NET Services

   

WD Services

   

HA Services

   

Corporate and Other

   

Total Continuing Operations

   

Discontinued Operations

   

Total

 

Revenues

  $ 277,130     $ 102,547     $ 52,882     $ (109 )   $ 432,450     $ 84,722     $ 517,172  

Operating income (loss)

    14,315       (5,088 )     4,456       (6,805 )     6,878       (2,785 )     4,093  

 

 

   

Three Months Ended September 30, 2014

 
   

NET Services

   

WD Services

   

HA Services

   

Corporate and Other

   

Total Continuing Operations

   

Discontinued Operations

   

Total

 

Revenues

  $ 226,055     $ 83,596     $ -     $ (177 )   $ 309,474     $ 84,744     $ 394,218  

Operating income (loss)

    15,537       553       -       (13,642 )     2,448       (775 )     1,673  

 

 

   

Nine Months Ended September 30, 2015

 
   

NET Services

   

WD Services

   

HA Services

   

Corporate and Other

   

Total Continuing Operations

   

Discontinued Operations

   

Total

 

Revenues

  $ 802,580     $ 302,340     $ 165,718     $ (121 )   $ 1,270,517     $ 260,701     $ 1,531,218  

Operating income (loss)

    53,930       (4,644 )     17,236       (23,687 )     42,835       3,520       46,355  

 

 

   

Nine Months Ended September 30, 2014

 
   

NET Services

   

WD Services

   

HA Services

   

Corporate and Other

   

Total Continuing Operations

   

Discontinued Operations

   

Total

 

Revenues

  $ 640,428     $ 127,661     $ -     $ (187 )   $ 767,902     $ 259,673     $ 1,027,575  

Operating income (loss)

    50,598       3,594       -       (29,286 )     24,906       2,410       27,316  

 

 

 

 

 

###