SOURCE: Providence Service Corporation

Providence Service Corporation

March 10, 2016 17:40 ET

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, AZ--(Marketwired - 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.

   
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  
                                 
   
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  
                 
   
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  
                 
   
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.
   
   
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).
   
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 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).
   
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).
   
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).
   

Contact Information

  • Investor Relations Contact 
    David Shackelton
    Chief Financial Officer
    (520) 747-6600