SOURCE: Providence Service Corporation

Providence Service Corporation

August 01, 2016 17:10 ET

Providence Service Corporation Reports Second Quarter 2016 Results

STAMFORD, CT--(Marketwired - August 01, 2016) -

  • Revenue of $450.6 million
  • Income from continuing operations, net of tax, of $4.0 million; diluted EPS of $0.21
  • Adjusted Net Income (non-GAAP) of $13.1 million; Adjusted EPS (non-GAAP) of $0.70
  • Adjusted EBITDA (non-GAAP) of $30.7 million

The Providence Service Corporation (the "Company") (NASDAQ: PRSC), a holding company whose subsidiaries provide critical healthcare and workforce development services, today reported financial results for the second quarter and six months ended June 30, 2016.

"I am pleased to announce another quarter of solid performance, particularly within US Healthcare Services where both transportation revenue and assessment margins exceeded our expectations," said James Lindstrom, President and Chief Executive Officer. "Providence's underlying fundamentals remain strong, supplemented by our holding company approach and multiple value enhancement initiatives."

Second Quarter 2016 Results

For the second quarter of 2016, the Company reported consolidated revenue of $450.6 million, an increase of 7.7% from $418.2 million in the second quarter of 2015.

Income from continuing operations, net of tax, in the second quarter of 2016 was $4.0 million, or $0.21 per diluted common share, compared to $4.8 million, or $0.16 per diluted common share, in the second quarter of 2015. Adjusted Net Income (non-GAAP) in the second quarter of 2016 was $13.1 million, or $0.70 per diluted common share, compared to $14.2 million, or $0.67 per diluted common share, in the second quarter of 2015.

Adjusted EBITDA (non-GAAP) in the second quarter of 2016 was $30.7 million, compared to $31.6 million in the second quarter of 2015.

During the second quarter of 2016, the Company repurchased 273,169 common shares under its share repurchase program for $12.9 million, or for an average price of $47.36 per share.

Year to Date 2016 Results

For the first six months of 2016, the Company reported consolidated revenue of $883.3 million, an increase of 5.4% from $838.1 million in the comparable period of 2015.

Income from continuing operations, net of tax, for the first six months of 2016 was $6.1 million, or $0.27 per diluted common share, compared to $10.7 million, or $0.45 per diluted common share, in the comparable period of 2015. Adjusted Net Income (non-GAAP) for the first half of 2016 was $22.5 million, or $1.19 per diluted common share, compared to $29.0 million, or $1.48 per diluted common share, in the same period last year.

Adjusted EBITDA (non-GAAP) for the first half of 2016 was $56.0 million, compared to $64.6 million for the first half of 2015.

During the first half of 2016, the Company repurchased 708,904 common shares for $32.4 million, or for an average price of $45.73 per share.

A reconciliation of Adjusted EBITDA and Adjusted Net Income to income from continuing operations, net of tax, and the calculation of Adjusted EPS are presented below.

Segment Results

For analysis purposes, we provide revenue, expenses, operating income (loss), income (loss) from continuing operations, net of taxes, and Adjusted EBITDA (non-GAAP) on a segment basis. 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, accounting, 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 $309.2 million for the second quarter of 2016, an increase of 14.2% from $270.7 million in the second quarter of 2015. Operating income was $17.8 million, or 5.7% of revenue, in the second quarter of 2016, compared to $18.9 million, or 7.0% of revenue, in the second quarter of 2015. Adjusted EBITDA (non-GAAP) was $20.7 million, or 6.7% of revenue, in the second quarter of 2016, compared to $21.2 million, or 7.8% of revenue, in the second quarter of 2015.

NET Services revenue was $600.1 million for the first half of 2016, an increase of 14.2% from $525.5 million in the first half of 2015. Operating income was $36.1 million, or 6.0% of revenue, for the first half of 2016, compared to $39.6 million, or 7.5% of revenue, for the first half of 2015. Adjusted EBITDA (non-GAAP) was $41.9 million, or 7.0% of revenue, for the first half of 2016, compared to $44.2 million, or 8.4% of revenue, for the first half of 2015.

The year-over-year increase in NET Services revenue in the second quarter of 2016 was primarily due to new state and managed care organization contracts in multiple geographies as well as increased membership under certain existing contracts. Adjusted EBITDA (non-GAAP) as a percentage of revenue declined as a result of increased member utilization and additional compensation expense related to long-term incentive plans tied to value creation.

HA Services

HA Services revenue was $52.3 million in the second quarter of 2016, a decrease of 5.7% compared to the second quarter of 2015. Operating income was $6.7 million, or 12.8% of revenue, in the second quarter of 2016, compared to $6.3 million, or 11.3% of revenue, in the second quarter of 2015. Adjusted EBITDA (non-GAAP) was $14.6 million, or 28.0% of revenue, in the second quarter of 2016, compared to $13.5 million, or 24.3% of revenue, in the second quarter of 2015.

HA Services revenue was $102.9 million for the first half of 2016, a decrease of 8.8% compared to the first half of 2015. Operating income was $11.0 million, or 10.7% of revenue, for the first half of 2016, compared to $12.8 million, or 11.3% of revenue, for the first half of 2015. Adjusted EBITDA (non-GAAP) was $26.8 million, or 26.0% of revenue, for the first half of 2016, compared to $27.1 million, or 24.1% of revenue, for the first half of 2015.

The decline in HA Services revenue in the second quarter of 2016 compared to the prior year period was due to a decline in the average price per assessment, which was largely the result of a change in customer mix in the second quarter of 2016 compared to the second quarter of 2015. In 2015, pricing was highest in the second quarter, which will not be the case in 2016. Adjusted EBITDA (non-GAAP) as a percentage of revenue increased due to management's continued success in driving efficiencies as well as a reduction in expense due to forfeited long-term awards, which have been reallocated to current employees.

Global Workforce Development

WD Services

WD Services revenue for the second quarter of 2016 was $89.3 million, a decrease of 3.1% compared to the second quarter of 2015. Excluding the effects of changes in currency exchange rates, revenue increased 1.6% in the second quarter of 2016 versus the second quarter of 2015. WD Services incurred an operating loss of $5.2 million in the second quarter of 2016, compared to an operating loss of $2.4 million in the second quarter of 2015. The operating loss in the second quarter of 2016 includes $3.7 million of redundancy costs related to continued service delivery redesigns, primarily related to the segment's offender rehabilitation program.

Prior to the impact of the Mission Providence joint venture, WD Services Adjusted EBITDA (non-GAAP) was $2.3 million, or 2.6% of revenue, in the second quarter of 2016 compared to $4.7 million, or 5.1% of revenue, in the second quarter of 2015. The Adjusted EBITDA (non-GAAP) associated with Mission Providence was negative $1.2 million in the second quarter of 2016 and negative $1.3 million in the second quarter of 2015.

Revenue for the first half of 2016 was $180.3 million, a decrease of 9.7% compared to the first half of 2015. Excluding the effects of changes in currency exchange rates, revenue declined 5.2% in the first half of 2016 versus the first half of 2015. WD Services incurred an operating loss of $7.3 million for the first half of 2016, compared to operating income of $0.4 million for the first half of 2015. The operating loss for the first half of 2016 included $5.1 million of redundancy costs related to continued service delivery redesigns and the anticipated closure of the segment's operations in Poland.

Prior to the impact of the Mission Providence joint venture, WD Services Adjusted EBITDA (non-GAAP) was $5.2 million, or 2.9% of revenue, for the first half of 2016 compared to $13.6 million, or 6.8% of revenue, for the first half of 2015. The Adjusted EBITDA (non-GAAP) associated with Mission Providence was negative $4.3 million for the first half of 2016 and negative $4.9 million for the first half of 2015.

The decline in Adjusted EBITDA (non-GAAP) at WD Services was primarily due to start-up costs related to the segment's offender rehabilitation program in the United Kingdom and the operational underperformance of employability programs in France.

Corporate and Other

Corporate and Other incurred an operating loss of $5.8 million in the second quarter of 2016 compared to an operating loss of $7.6 million in the second quarter of 2015. Adjusted EBITDA (non-GAAP) was negative $5.8 million in the second quarter of 2016 compared to negative $6.5 million in the second quarter of 2015.

Corporate and Other incurred an operating loss of $13.8 million for the first half of 2016 compared to an operating loss of $16.9 million for the first half of 2015. Adjusted EBITDA (non-GAAP) was negative $13.6 million in the second quarter of 2016 compared to negative $15.6 million in the second quarter of 2015.

The improvement in Adjusted EBITDA (non-GAAP) in the second quarter of 2016 versus the prior year period was primarily due a reduction in professional fees and stock-based compensation expense.

Conference Call

Providence will hold a conference call at 8:00 a.m. EDT Tuesday, August 2, 2016 to discuss its financial results and corporate developments. Interested parties are invited to listen to the call live at http://investor.prscholdings.com or by dialing (844) 244-3865, or for international callers (518) 444-0681, and using the passcode 56389155. A replay of the teleconference will be available on http://investor.prscholdings.com. A replay will also be available until August 16, 2016 by dialing (855) 859-2056 or (404) 537-3406 and using passcode 56389155.

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.

Non-GAAP Financial Measures and Adjustments

In addition to the financial results prepared in accordance with US generally accepted accounting principles (GAAP), this press release includes EBITDA and Adjusted EBITDA for the Company and our operating segments and Adjusted Net Income and Adjusted EPS for the Company, which are financial measures that are not recognized under GAAP. EBITDA is defined as income (loss) from continuing operations, before: (1) interest expense, net, (2) provision (benefit) for income taxes and (3) depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before certain items, including restructuring and termination costs and foreign currency adjustments. Adjusted Net Income is defined as income from continuing operations, net of tax plus net loss attributable to noncontrolling interest and before: (1) certain items, including restructuring and termination costs, and foreign currency adjustments, (2) intangible amortization expense and (3) the income tax impact of such adjustments. Adjusted EPS is calculated as Adjusted Net Income less (as applicable): (1) dividends on convertible preferred stock, (2) accretion of convertible preferred stock discount and (3) income allocated to participating stockholders, divided by the diluted weighted-average number of common shares outstanding. We utilize these non-GAAP measurements, which exclude certain expenses, because we believe the timing of such expenses is unpredictable and not driven by our core operating results, and therefore render comparisons with prior periods as well as with other companies in our industry less meaningful. We believe such measures allow investors to gain a better understanding of the factors and trends affecting the ongoing cash earnings capabilities of our business, for which capital investments are made and debt is serviced.

Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because they are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies, and exclude expenses that may have a material impact on our reported financial results. The presentation of non-GAAP financial information is not meant to be considered in isolation from or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. We urge you to review the reconciliations of our non-GAAP financial measures to the comparable GAAP financial measures included below, and not to rely on any single financial measure to evaluate our business.

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, 2015 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   
Unaudited Condensed Consolidated Statements of Income   
(in thousands except share and per share data)   
    
     Three months ended June 30,     Six months ended June 30,   
     2016     2015     2016     2015   
    
Service revenue, net  $ 450,632   $ 418,238   $ 883,282   $ 838,067   
    
Operating expenses:                          
 Service expense    405,050     371,616     791,538     738,153   
 General and administrative expense    17,373     18,294     36,546     37,760   
 Depreciation and amortization    14,814     13,191     29,150     26,244   
Total operating expenses    437,237     403,101     857,234     802,157   
Operating income    13,395     15,137     26,048     35,910   
    
    
Other expenses:                          
 Interest expense, net    3,436     3,722     7,071     8,917   
 Equity in net loss of investee    1,459     1,059     4,176     3,542   
 Gain on foreign currency transactions    (775 )   (714 )   (849 )   (395 ) 
Income from continuing operations                          
before income taxes    9,275     11,070     15,650     23,846   
Provision for income taxes    5,280     6,227     9,527     13,148   
Income from continuing operations, net of tax    3,995     4,843     6,123     10,698   
Discontinued operations, net of tax    -     1,732     -     2,126   
Net income    3,995     6,575     6,123     12,824   
Net loss attributable to noncontrolling interests    628     59     735     47   
Net income attributable to Providence  $ 4,623   $ 6,634   $ 6,858   $ 12,871   
    
Net income available to common                          
stockholders  $ 3,104   $ 4,181   $ 4,108   $ 9,243   
    
Basic earnings per common share:                          
Continuing operations  $ 0.21   $ 0.16   $ 0.27   $ 0.46   
Discontinued operations    -     0.10     -     0.12   
Basic earnings per common share  $ 0.21   $ 0.26   $ 0.27   $ 0.58   
    
Diluted earnings per common share:                          
Continuing operations  $ 0.21   $ 0.16   $ 0.27   $ 0.45   
Discontinued operations    -     0.10     -     0.12   
Diluted earnings per common share  $ 0.21   $ 0.26   $ 0.27   $ 0.57   
    
Weighted-average number of common                          
shares outstanding:                          
 Basic    14,893,595     16,097,198     14,975,582    16,036,959   
 Diluted    15,019,312     16,240,898     15,098,945    16,193,372   
  
   
The Providence Service Corporation  
Condensed Consolidated Balance Sheets  
(in thousands)  
(Unaudited)  
     June 30,  December 31,  
     2016    2015  
Assets            
Current assets:            
 Cash and cash equivalents  $ 68,824  $ 84,770  
 Accounts receivable, net of allowance    178,295    178,049  
 Other current assets (1)    78,260    56,905  
Total current assets    325,379    319,724  
Property and equipment, net    67,324    57,787  
Goodwill and intangible assets, net    601,076    625,980  
Other long-term assets (2)    42,486    46,711  
Total assets  $ 1,036,265  $ 1,050,202  
Liabilities and stockholders' equity            
Current liabilities:            
 Current portion of long-term obligations  $ 35,250  $ 31,375  
 Other current liabilities (3)    275,823    263,897  
Total current liabilities    311,073    295,272  
Long-term obligations, less current portion    272,828    268,696  
Other long-term liabilities (4)    118,716    118,526  
Total liabilities    702,617    682,494  
Mezzanine and stockholders' equity            
Convertible preferred stock, net    77,565    77,576  
Stockholders' equity    256,083    290,132  
Total liabilities and stockholders' equity  $ 1,036,265  $ 1,050,202  

(1) Comprised of other receivables, restricted cash, deferred tax assets and prepaid expenses and other.
(2) Comprised of restricted cash less current portion, deferred tax assets and other assets.
(3) Comprised of accounts payable, accrued expenses, accrued transportation costs, deferred revenue and reinsurance liability reserves.
(4) Includes deferred tax liabilities and other long-term liabilities.

       
The Providence Service Corporation
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
     Six months ended June 30,   
     2016     2015 (1)   
Operating activities              
Net income  $ 6,123   $ 12,824   
 Depreciation and amortization    29,150     29,857   
 Stock based compensation    1,947     6,058   
 Equity in net loss of investee    4,176     3,542   
 Other non-cash charges    (8,167 )   (4,839 ) 
 Changes in working capital (2)    32,605     (23,886 ) 
 Income taxes payable on sale of business    (28,337 )   -   
Net cash provided by operating activities    37,497     23,556   
Investing activities              
Purchase of property and equipment    (23,636 )   (13,122 ) 
Acquisition, net of cash acquired    -     (1,665 ) 
Equity investments    (6,381 )   (13,784 ) 
Other investing activities    3,840     (422 ) 
Net cash used in investing activities    (26,177 )   (28,993 ) 
Financing activities              
Proceeds from issuance of preferred stock, net of issuance costs    -     80,667   
Preferred stock dividends    (2,197 )   (1,698 ) 
Repurchase of common stock, for treasury    (32,534 )   (734 ) 
Net, proceeds (repayment) of long-term debt    7,000     (87,125 ) 
Other financing activities    998     (2,909 ) 
Net cash used in financing activities    (26,733 )   (11,799 ) 
Effect of exchange rate changes on cash    (533 )   1,991   
Net change in cash    (15,946 )   (15,245 ) 
Cash at beginning of period    84,770     160,406   
Cash at end of period  $ 68,824   $ 145,161   

(1) Includes both continuing and discontinued operations.
(2) Comprised of changes in accounts receivable, other receivables, restricted cash, prepaid expenses, accounts payable, accrued expenses, accrued transportation costs, deferred revenue and other liabilities.

    
The Providence Service Corporation   
Reconciliation of Non-GAAP Financial Measures   
Adjusted EBITDA and Segment Information   
(in thousands)   
(Unaudited)   
    
           Three Months Ended June 30, 2016         
    NET         Corporate      
    Services   WD Services   HA Services   and Other    Total   
    
Service revenue, net  $ 309,156   $ 89,289   $ 52,272   $ (85 ) $ 450,632   
Operating expenses:                                
 Service expense    285,687     82,073     36,963     327     405,050   
 General and administrative expense    2,785     8,585     662     5,341     17,373   
 Depreciation and amortization    2,931     3,836     7,965     82     14,814   
Total operating expenses    291,403     94,494     45,590     5,750     437,237   
Operating income (loss)    17,753     (5,205 )   6,682     (5,835 )   13,395   
Other expenses:                                
 Interest expense, net    (1 )   56     (2 )   3,383     3,436   
 Equity in net loss of investee    -     1,459     -     -     1,459   
 Gain on foreign currency transactions    -     (773 )   -     (2 )   (775 ) 
Income (loss) from continuing operations,                                
before income tax    17,754     (5,947 )   6,684     (9,216 )   9,275   
Provision (benefit) for income taxes    6,044     (797 )   2,466     (2,433 )   5,280   
Income (loss) from continuing operations, net of taxes    11,710     (5,150 )   4,218     (6,783 )   3,995   
Interest expense, net    (1 )   56     (2 )   3,383     3,436   
Provision (benefit) for income taxes    6,044     (797 )   2,466     (2,433 )   5,280   
Depreciation and amortization    2,931     3,836     7,965     82     14,814   
EBITDA    20,684     (2,055 )   14,647     (5,751 )   27,525   
    
Gain on foreign currency transactions    -     (773 )   -     (2 )   (775 ) 
WD Services adjustments (1)    -     3,919     -     -     3,919   
Adjusted EBITDA  $ 20,684   $ 1,091   $ 14,647   $ (5,753 ) $ 30,669   

(1) Includes expense related to redundancy costs of $3,665 and income tax benefit and D&A included within equity in net loss of investee of $254.

    
The Providence Service Corporation   
Reconciliation of Non-GAAP Financial Measures   
Adjusted EBITDA and Segment Information   
(in thousands)   
(Unaudited)   
    
   Three Months Ended June 30, 2015 (1)   
   
 
NET
Services
 
 
 
WD Services
 
 
 
 
 
HA Services
 
 
 
 
Corporate
and Other
 
 
 
 
 
Total
 
 
 
 
 
    
Service revenue, net  $ 270,690  $ 92,175   $ 55,404   $ (31 ) $ 418,238   
Operating expenses:                               
 Service expense    246,931    83,308     41,193     184     371,616   
 General and administrative expense    2,554    7,984     760     6,996     18,294   
 Depreciation and amortization    2,329    3,332     7,185     345     13,191   
Total operating expenses    251,814    94,624     49,138     7,525     403,101   
Operating income (loss)    18,876    (2,449 )   6,266     (7,556 )   15,137   
Other expenses:                               
 Interest expense, net    -    (58 )   (5 )   3,785     3,722   
 Equity in net loss of investee    -    1,059     -     -     1,059   
 Gain on foreign currency transactions    -    (714 )   -     -     (714 ) 
Income (loss) from continuing operations,                               
before income tax    18,876    (2,736 )   6,271     (11,341 )   11,070   
Provision (benefit) for income taxes    7,183    (785 )   2,521     (2,692 )   6,227   
Income (loss) from continuing operations, net of taxes    11,693    (1,951 )   3,750     (8,649 )   4,843   
Interest expense, net    -    (58 )   (5 )   3,785     3,722   
Provision (benefit) for income taxes    7,183    (785 )   2,521     (2,692 )   6,227   
Depreciation and amortization    2,329    3,332     7,185     345     13,191   
EBITDA    21,205    538     13,451     (7,211 )   27,983   
    
Charges related to the separation of an executive officer, net    -    -     -     695     695   
WD Services adjustments (2)    -    2,895     -     -     2,895   
Adjusted EBITDA  $ 21,205  $ 3,433   $ 13,451   $ (6,516 ) $ 31,573   

(1) Beginning in the fourth quarter of 2015, the Company began including in the calculation of WD Services Adjusted EBITDA 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 quarterly presentations of Adjusted EBITDA to be consistent with these changes.
(2) Includes expense related to restricted shares and cash placed into escrow at the time of the Ingeus acquisition and other acquisition related costs of $1,980, redundancy costs of $1,882, income tax benefit and D&A included within equity in net loss of investee of ($253), and gain on foreign currency transactions of ($714).

    
The Providence Service Corporation   
Reconciliation of Non-GAAP Financial Measures   
Adjusted EBITDA and Segment Information   
(in thousands)   
(Unaudited)   
    
           Six Months Ended June 30, 2016         
   NET
Services
  
WD Services
   
HA Services
    Corporate
and Other
   
Total
  
 
    
Service revenue, net  $ 600,140   $ 180,332   $ 102,864   $ (54 ) $ 883,282   
Operating expenses:                                
 Service expense    552,656     163,745     74,753     384     791,538   
 General and administrative expense    5,622     16,456     1,318     13,150     36,546   
 Depreciation and amortization    5,807     7,415     15,762     166     29,150   
Total operating expenses    564,085     187,616     91,833     13,700     857,234   
Operating income (loss)    36,055     (7,284 )   11,031     (13,754 )   26,048   
Other expenses:                                
 Interest expense, net    (2 )   89     (4 )   6,988     7,071   
 Equity in net loss of investee    -     4,176     -     -     4,176   
 Gain on foreign currency transactions    -     (848 )   -     (1 )   (849 ) 
Income (loss) from continuing operations,                                
before income tax    36,057     (10,701 )   11,035     (20,741 )   15,650   
Provision (benefit) for income taxes    13,193     (979 )   4,150     (6,837 )   9,527   
Income (loss) from continuing operations, net of taxes    22,864     (9,722 )   6,885     (13,904 )   6,123   
Interest expense, net    (2 )   89     (4 )   6,988     7,071   
Provision (benefit) for income taxes    13,193     (979 )   4,150     (6,837 )   9,527   
Depreciation and amortization    5,807     7,415     15,762     166     29,150   
EBITDA    41,862     (3,197 )   26,793     (13,587 )   51,871   
    
Gain on foreign currency transactions    -     (848 )   -     (1 )   (849 ) 
WD Services adjustments (1)    -     4,972     -     -     4,972   
Adjusted EBITDA  $ 41,862   $ 927   $ 26,793   $ (13,588 ) $ 55,994   

(1) Includes expense related to redundancy costs of $5,056 and income tax benefit and D&A included within equity in net loss of investee of ($84).

    
The Providence Service Corporation   
Reconciliation of Non-GAAP Financial Measures   
Adjusted EBITDA and Segment Information   
(in thousands)   
(Unaudited)   
    
  Six Months Ended June 30, 2015 (1)
 
 
 NET
Services
  
WD Services
  
HA Services
  Corporate
and Other
  
Total
  
    
Service revenue, net  $ 525,450   $ 199,792   $ 112,836   $ (11 ) $ 838,067   
Operating expenses:                                
 Service expense    476,178     177,540     84,406     29     738,153   
 General and administrative expense    5,051     15,209     1,282     16,218     37,760   
 Depreciation and amortization    4,606     6,648     14,367     623     26,244   
Total operating expenses    485,835     199,397     100,055     16,870     802,157   
Operating income (loss)    39,615     395     12,781     (16,881 )   35,910   
Other expenses:                                
 Interest expense, net    (1 )   (58 )   (9 )   8,985     8,917   
 Equity in net loss of investee    -     3,542     -     -     3,542   
 Gain on foreign currency transactions    -     (395 )   -     -     (395 ) 
Income (loss) from continuing operations,                                
before income tax    39,616     (2,694 )   12,790     (25,866 )   23,846   
Provision (benefit) for income taxes    15,312     1,640     5,194     (8,998 )   13,148   
Income (loss) from continuing operations, net of taxes    24,304     (4,334 )   7,596     (16,868 )   10,698   
Interest expense, net    (1 )   (58 )   (9 )   8,985     8,917   
Provision (benefit) for income taxes    15,312     1,640     5,194     (8,998 )   13,148   
Depreciation and amortization    4,606     6,648     14,367     623     26,244   
EBITDA    44,221     3,896     27,148     (16,258 )   59,007   
    
Charges related to the separation of an executive officer, net    -     -     -     695     695   
WD Services adjustments (2)    -     4,891     -     -     4,891   
Adjusted EBITDA  $ 44,221   $ 8,787   $ 27,148   $ (15,563 ) $ 64,593   

(1) Beginning in the fourth quarter of 2015, the Company began including in the calculation of WD Services Adjusted EBITDA 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 quarterly presentations of Adjusted EBITDA to be consistent with these changes.
(2) Includes expense related to restricted shares and cash placed into escrow at the time of the Ingeus acquisition and other acquisition related expenses of $3,970, redundancy costs of $2,631, income tax benefit and D&A included within equity in net loss of investee of ($1,315), and gain on foreign currency transactions of ($395).

   
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 June 30,
  Six months ended June 30,  
  2016  2015  2016  2015  
              
Income from continuing operations, net of tax $3,995  $4,843  $6,123  $10,698  
Net loss attributable to noncontrolling interests  628   59   735   47  
WD Services adjustments  3,386 (1)
 3,004
 (2)
 5,169
 (3)
 6,062
 (4)
Gain on foreign currency transactions  (2)  -   (1)  -  
Payments related to separation arrangements with executive officer, net  -   695   -   695  
Intangible amortization expense  8,817   9,881   17,632   19,692  
Tax effected impact of adjustments  (3,729)  (4,264)  (7,141)  (8,243) 
Adjusted Net Income  13,095   14,218   22,517   28,951  
                  
Dividends on convertible preferred stock  (1,099)  (1,104)  (2,197)  (1,698) 
Less: Accretion of convertible preferred stock discount  -   (826)  -   (1,071) 
Income allocated to participating securities  (1,429)  (1,369)  (2,409)  (2,226) 
Adjusted Net Income available to common stockholders $10,567  $10,919  $17,911  $23,956  
                  
Adjusted Net Income per common share $0.70  $0.67  $1.19  $1.48  
                  
Diluted weighted-average number of common shares outstanding  15,019,312   16,240,898   15,098,945   16,193,372  

(1) WD Services adjustments include redundancy costs of $3,665, amortization expense included within equity in net loss of investee of $494, and gain on foreign currency transactions of ($773).
(2) WD Services adjustments include expense related to restricted shares and cash placed into escrow at the time of the Ingeus acquisition and other acquisition related costs of $1,980, redundancy costs of $1,882, gain on foreign currency transactions of ($714), and amortization expense included within equity in net loss of investee of ($144).
(3) WD Services adjustments include redundancy costs of $5,056, amortization expense included within equity in net loss of investee of $961, and gain on foreign currency transactions of ($848).
(4) WD Services adjustments include expense related to restricted shares and cash placed into escrow at the time of the Ingeus acquisition of $3,970, redundancy costs of $2,631, gain on foreign currency transactions of ($395), and amortization expense included within equity in net loss of investee of ($144).

Contact Information

  • Investor Relations Contact
    Chris Brigleb
    VP of Finance
    (203) 816-6589