SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2017~~2023



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period fromto

Commission File Number 001-34221

~~The Providence Service Corporation~~ModivCare Inc.

(Exact name of registrant as specified in its charter)



~~Delaware~~

	~~86-0845127~~
Delaware		86-0845127
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

6900 E Layton Avenue, 12th Floor, Denver, Colorado80237

(Address of principal executive offices)(Zip Code)



~~700 Canal Street, Third Floor~~ ~~Stamford, Connecticut~~		~~06902~~
~~(Address of principal executive offices)~~		~~(Zip Code)~~

~~(203) 307-2800~~(303) 728-7012

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” ~~“smaller~~

“smaller reporting company” and “emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer		☒	Accelerated filer	☐
Non-accelerated filer		☐	Smaller reporting company	☐

~~Large accelerated filer ☐~~		~~Accelerated filer ☒~~

~~Non-accelerated filer ☐ (Do not check if a smaller reporting company)~~	~~Smaller reporting company ☐~~

Emerging growth company ☐	☐

TABLE OF CONTENTS



					Page

PART I—FINANCIAL INFORMATION

Item 1.			Financial Statements		4

			Unaudited Condensed Consolidated Balance Sheets – September 30, ~~2017 (unaudited)~~2023 and December 31, ~~2016~~2022		4

			Unaudited Condensed Consolidated Statements of ~~Income~~Operations – Three and nine months ended September 30, ~~2017~~2023 and ~~2016~~2022		5

			~~Unaudited Condensed Consolidated Statements of Comprehensive Income – Three and nine months ended September 30, 2017 and 2016~~	6

	Unaudited Condensed Consolidated Statements of Cash Flows – Nine months ended September 30, ~~2017~~2023 and ~~2016~~2022	76

			Unaudited Condensed Consolidated Statements of Stockholders’ Equity – Nine months ended June 30, 2023 and 2022		8

			Notes to the Unaudited Condensed Consolidated Financial Statements – September 30, ~~2017~~2023		89

Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations		2425

Item 3.			Quantitative and Qualitative Disclosures About Market Risk		3942

Item 4.			Controls and Procedures		4042

PART II—OTHER INFORMATION

Item 1.			Legal Proceedings		4144

Item 1A.			Risk Factors		4144

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds		4245

Item 3.			Defaults Upon Senior Securities		4345

Item 4.			Mine Safety Disclosures		4345

Item 5.5 .			Other Information		4345

Item 6.			Exhibits		4346

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

~~The Providence Service Corporation~~ModivCare Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)


	September 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	8,070	$	14,451
Accounts receivable, net of allowance of $1,396 and $2,078, respectively	202,701		223,210
Contract receivables	129,275		71,131
Other receivables	8,782		2,506
Prepaid expenses and other current assets	38,569		34,332
Restricted cash	544		524
Total current assets	387,941		346,154
Property and equipment, net	81,419		69,138
Goodwill	785,554		968,654
Payor network, net	346,109		391,980
Other intangible assets, net	34,482		47,429
Equity investment	45,207		41,303
Operating lease right-of-use assets	39,744		39,405
Other assets	42,630		40,209
Total assets	$	1,763,086	$	1,944,272
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	41,834	$	54,959
Accrued contract payables	133,576		194,287
Accrued transportation costs	102,974		96,851
Accrued expenses and other current liabilities	146,564		135,860
Current portion of operating lease liabilities	8,902		9,640
Short-term borrowings	83,000		—
Total current liabilities	516,850		491,597
Long-term debt, net of deferred financing costs of $17,370 and $20,639, respectively	982,630		979,361
Deferred tax liabilities	42,001		57,236

Operating lease liabilities, less current portion	33,397		32,088
Other long-term liabilities	29,347		29,434
Total liabilities	1,604,225		1,589,716
Commitments and contingencies (Note 13)
Stockholders’ equity
Common stock: Authorized 40,000,000 shares; $0.001 par value; 19,771,636 and 19,729,923, respectively, issued and outstanding (including treasury shares)	20		20
Additional paid-in capital	448,443		444,255
Retained earnings (accumulated deficit)	(19,185)		180,023
Treasury shares, at cost, 5,575,275 and 5,573,529 shares, respectively	(270,417)		(269,742)
Total stockholders’ equity	158,861		354,556
Total liabilities and stockholders’ equity	$	1,763,086	$	1,944,272

See accompanying notes to the unaudited condensed consolidated financial statements.

September 30,
2017 December 31,
2016
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 92,178
$ 72,262
Accounts receivable, net of allowance of $5,765 in 2017 and $5,901 in 2016 175,162
162,115
Other receivables 5,555
12,639
Prepaid expenses and other 39,083
37,895
Restricted cash 1,198
3,192
Total current assets 313,176
288,103
Property and equipment, net 48,191
46,220
Goodwill 121,555
119,624
Intangible assets, net 45,750
49,124
Equity investments 157,067
161,363
Other assets 12,911
8,397
Restricted cash, less current portion 5,902
10,938
Deferred tax asset 4,436
1,510
Total assets $ 708,988
$ 685,279
Liabilities, redeemable convertible preferred stock and stockholders' equity
Current liabilities:
Current portion of long-term obligations $ 1,528
$ 1,721
Accounts payable 19,921
22,177
Accrued expenses 103,397
102,381
Accrued transportation costs 101,195
72,356
Deferred revenue 17,421
20,522
Reinsurance and related liability reserves 4,881
8,639
Total current liabilities 248,343
227,796
Long-term obligations, less current portion 566
1,890
Other long-term liabilities 23,968
22,380
Deferred tax liabilities 54,363
57,973
Total liabilities 327,240
310,039
Commitments and contingencies (Note 11)

Redeemable convertible preferred stock
Convertible preferred stock, net: Authorized 10,000,000 shares; $0.001 par value; 803,232 and 803,398 issued and outstanding; 5.5%/8.5% dividend rate 77,549
77,565
Stockholders' equity
Common stock: Authorized 40,000,000 shares; $0.001 par value; 17,446,673 and 17,315,661 issued and outstanding (including treasury shares) 17
17
Additional paid-in capital 310,017
302,010
Retained earnings 167,004
156,718
Accumulated other comprehensive loss, net of tax (26,331 ) (33,449 )
Treasury shares, at cost, 3,944,171 and 3,478,676 shares (144,201 ) (125,201 )
Total Providence stockholders' equity 306,506
300,095
Noncontrolling interest (2,307 ) (2,420 )
Total stockholders' equity 304,199
297,675
Total liabilities, redeemable convertible preferred stock and stockholders' equity $ 708,988
$ 685,279

ModivCare Inc.

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)


	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Service revenue, net	$	686,925	$	647,782	$	2,048,338	$	1,850,472
Grant income (Note 2)	551		789		4,649		4,587

Operating expenses:
Service expense	579,214		534,563		1,718,735		1,498,108
General and administrative expense	70,142		75,889		229,095		232,108
Depreciation and amortization	26,077		25,672		77,679		74,376
Impairment of goodwill	—		—		183,100		—
Total operating expenses	675,433		636,124		2,208,609		1,804,592

Operating income (loss)	12,043		12,447		(155,622)		50,467

Interest expense, net	17,844		15,557		50,769		46,429
Income (loss) before income taxes and equity method investment	(5,801)		(3,110)		(206,391)		4,038
Income tax (provision) benefit	1,659		1,053		4,362		(877)
Equity in net income (loss) of investee, net of tax	(160)		(26,448)		2,821		(28,020)
Net loss	$	(4,302)	$	(28,505)	$	(199,208)	$	(24,859)

Loss per common share:
Basic	$	(0.30)	$	(2.03)	$	(14.06)	$	(1.77)
Diluted	$	(0.30)	$	(2.03)	$	(14.06)	$	(1.77)

Weighted-average number of common shares outstanding:
Basic	14,182,839		14,051,794		14,169,537		14,041,224
Diluted	14,182,839		14,051,794		14,169,537		14,041,224

See accompanying notes to the unaudited condensed consolidated financial ~~statements~~

~~The Providence Service Corporation~~

~~Unaudited Condensed Consolidated Statements of Income~~

~~(in thousands except share and per share data)~~statements.

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Service revenue, net $ 409,517
$ 412,271
$ 1,216,994
$ 1,192,426

Operating expenses:
Service expense 378,032
378,488
1,124,478
1,095,011
General and administrative expense 18,629
17,320
53,705
52,548
Depreciation and amortization 6,547
6,670
19,716
20,058
Total operating expenses 403,208
402,478
1,197,899
1,167,617

Operating income 6,309
9,793
19,095
24,809

Other expenses:
Interest expense, net 302
338
983
1,239
Equity in net (gain) loss of investees 460
1,517
991
5,693
Gain on sale of equity investment (12,606 ) —
(12,606 ) —
Loss (gain) on foreign currency transactions 200
(482 ) 600
(1,332 )
Income from continuing operations before income taxes 17,953
8,420
29,127
19,209
Provision for income taxes 2,989
4,678
8,391
12,466
Income from continuing operations, net of tax 14,964
3,742
20,736
6,743
Discontinued operations, net of tax (16 ) (2,791 ) (6,000 ) 332
Net income 14,948
951
14,736
7,075
Net loss (income) attributable to noncontrolling interests (95 ) (301 ) (295 ) 433
Net income attributable to Providence $ 14,853
$ 650
$ 14,441
$ 7,508

Net income (loss) available to common stockholders (Note 9) $ 11,962
$ (745 ) $ 8,927
$ 3,697

Basic earnings (loss) per common share:
Continuing operations $ 0.88
$ 0.14
$ 1.10
$ 0.23
Discontinued operations —
(0.19 ) (0.44 ) 0.02
Basic earnings (loss) per common share $ 0.88
$ (0.05 ) $ 0.66
$ 0.25

Diluted earnings (loss) per common share:
Continuing operations $ 0.88
$ 0.14
$ 1.09
$ 0.23
Discontinued operations —
(0.19 ) (0.44 ) 0.02
Diluted earnings (loss) per common share $ 0.88
$ (0.05 ) $ 0.65
$ 0.25

Weighted-average number of common shares outstanding:
Basic 13,581,662
14,523,408
13,612,764
14,823,757
Diluted 13,655,554
14,634,483
13,676,468
14,943,024

~~See accompanying notes to the unaudited condensed consolidated financial statements~~

~~The Providence Service Corporation~~

~~Unaudited Condensed Consolidated Statements of Comprehensive Income~~

~~(in thousands)~~

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Net income $ 14,948
$ 951
$ 14,736
$ 7,075
Net loss (income) attributable to noncontrolling interest (95 ) (301 ) (295 ) 433
Net income attributable to Providence 14,853
650
14,441
7,508
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax 2,165
(2,808 ) 6,591
(11,140 )
Reclassification of translation loss realized upon sale of equity investment 527
—
527
—
Other comprehensive income (loss): 2,692
(2,808 ) 7,118
(11,140 )
Comprehensive income (loss) 17,640
(1,857 ) 21,854
(4,065 )
Comprehensive loss (income) attributable to noncontrolling interest (26 ) (266 ) (113 ) 378
Comprehensive income (loss) attributable to Providence $ 17,614
$ (2,123 ) $ 21,741
$ (3,687 )

~~See accompanying notes to the unaudited condensed consolidated financial statements~~

~~The Providence Service Corporation~~ModivCare Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

Nine months ended September 30,
2017 2016
Operating activities
Net (loss) income $ 14,736
$ 7,075
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 13,802
17,039
Amortization 5,914
24,140
Provision for doubtful accounts 1,258
2,196
Stock-based compensation 4,586
3,204
Deferred income taxes (7,062 ) (15,446 )
Amortization of deferred financing costs and debt discount 516
1,573
Equity in net loss of investees 991
5,693
Gain on sale of equity investment (12,606 ) —
Other non-cash charges (credits) 555
(1,279 )
Changes in operating assets and liabilities:
Accounts receivable (10,647 ) (22,116 )
Prepaid expenses and other 7,517
(9,900 )
Reinsurance and related liability reserve (4,924 ) 984
Accounts payable and accrued expenses (3,407 ) 32,530
Income taxes payable on sale of business —
(30,153 )
Accrued transportation costs 28,839
31,935
Deferred revenue (4,537 ) (7,460 )
Other long-term liabilities 1,399
5,242
Net cash provided by operating activities 36,930
45,257
Investing activities
Purchase of property and equipment (15,293 ) (33,928 )
Net increase from short-term investments 300
242
Equity investments —
(6,381 )
Cost method investments (3,000 ) —
Loan to joint venture (566 ) —
Repayment of loan from joint venture 576
—
Proceeds from sale of equity investment 15,823
—
Restricted cash for reinsured claims losses and other 7,029
4,917
Net cash provided by (used in) investing activities 4,869
(35,150 )
Financing activities
Preferred stock dividends (3,305 ) (3,309 )
Repurchase of common stock, for treasury (18,763 ) (53,214 )
Proceeds from common stock issued pursuant to stock option exercise 1,528
4,099
Performance restricted stock surrendered for employee tax payment (96 ) —
Repayment of long-term debt —
(23,250 )
Proceeds from long-term debt —
43,500
Capital lease payments and other (1,711 ) (47 )
Net cash used in financing activities (22,347 ) (32,221 )
Effect of exchange rate changes on cash 464
(39 )
Net change in cash and cash equivalents 19,916
(22,153 )
Cash and cash equivalents at beginning of period 72,262
84,770
Cash and cash equivalents at end of period $ 92,178
$ 62,617

Supplemental cash flow information:
Cash paid for interest $ 776
$ 8,873
Cash paid for income taxes $ 14,804
$ 50,037
Prepaid financing and subsidiary stock issuance costs $ —
$ 1,049
Accrued unfunded future equity investment capital contributions $ —
$ 1,590
Purchase of equipment through capital lease obligation $ —
$ 809


	Nine months ended September 30,
	2023		2022
Operating activities
Net loss	$	(199,208)	$	(24,859)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation	18,212		14,398
Amortization	59,467		59,978
Stock-based compensation	4,029		5,152
Deferred income taxes	(15,235)		(31,232)
Impairment of goodwill	183,100		—
Amortization of deferred financing costs and debt discount	3,907		3,878
Other assets	(2,421)		(8,448)
Equity in net (income) loss of investee	(3,915)		38,883
Reduction of right-of-use assets	9,875		8,680
Changes in operating assets and liabilities:
Accounts receivable and other receivables	14,242		4,403
Contract receivables	(58,143)		(35,580)
Prepaid expenses and other current assets	(4,499)		4,254
Accrued contract payables	(60,710)		(37,786)
Accounts payable and accrued expenses	(2,422)		55,887
Accrued transportation costs	6,123		(13,180)
Other long-term liabilities	(9,729)		1,098
Net cash provided by (used in) operating activities	(57,327)		45,526
Investing activities
Purchase of property and equipment	(31,143)		(25,518)
Acquisitions, net of cash acquired	—		(78,872)
Net cash used in investing activities	(31,143)		(104,390)
Financing activities
Net proceeds from short-term borrowings	83,000		—
Payment of debt issuance costs	(376)		(2,415)
Proceeds from common stock issued pursuant to stock option exercise	31		1,237
Restricted stock surrendered for employee tax payment	(861)		(649)
Other financing activities	315		—
Net cash provided by (used in) financing activities	82,109		(1,827)
Net change in cash, cash equivalents and restricted cash	(6,361)		(60,691)
Cash, cash equivalents and restricted cash at beginning of period	14,975		133,422
Cash, cash equivalents and restricted cash at end of period	$	8,614	$	72,731

See accompanying notes to the unaudited condensed consolidated financial ~~statements~~

statements.

~~The Providence Service Corporation~~

ModivCare Inc.

Unaudited Supplemental Cash Flow Information

(in thousands)


	Nine months ended September 30,
Supplemental cash flow information	2023		2022
Cash paid for interest	$	32,816	$	31,460
Cash paid for income taxes	$	8,348	$	4,159
Assets acquired under operating leases	$	10,214	$	3,298
Acquisitions:
Purchase price	$	—	$	79,199
Less:
Cash acquired	—		327
Acquisitions, net of cash acquired	$	—	$	78,872

See accompanying notes to the unaudited condensed consolidated financial statements.

ModivCare Inc.

Unaudited Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share and per share data)


	Nine months ended September 30, 2023

	Common Stock			Additional		Retained Earnings		Treasury Stock
	Shares	Amount		Paid-In Capital		(Accumulated Deficit)		Shares	Amount		Total
Balance at December 31, 2022	19,729,923	$	20	$	444,255	$	180,023	5,573,529	$	(269,742)	$	354,556
Net loss	—	—		—		(3,962)		—	—		(3,962)
Stock-based compensation	—	—		1,039		—		—	—		1,039

Restricted stock issued	24,903	—		—		—		—	—		—
Restricted stock surrendered for employee tax payment	—	—		—		—		6,000	(620)		(620)
Shares issued for bonus settlement and director stipends	1,006	—		85		—		—	—		85
Balance at March 31, 2023	19,755,832	$	20	$	445,379	$	176,061	5,579,529	$	(270,362)	$	351,098
Net loss	—	—		—		(190,944)		—	—		(190,944)
Stock-based compensation	—	—		1,021		—		—	—		1,021
Exercise of employee stock options	549	—		31		—		—	—		31
Restricted stock issued	9,116	—		—		—		—	—		—
Restricted stock surrendered for employee tax payment	—	—		—		—		3,138	(221)		(221)
Shares issued for bonus settlement and director stipends	1,871	—		85		—		—	—		85
Shares issued for ESPP	—	—		178		—		(7,874)	193		371
Balance at June 30, 2023	19,767,368	$	20	$	446,694	$	(14,883)	5,574,793	$	(270,390)	$	161,441
Net loss	—	—		—		(4,302)		—	—		(4,302)
Stock-based compensation	—	—		1,664		—		—	—		1,664

Restricted stock issued	1,583	—		—		—		—	—		—
Restricted stock surrendered for employee tax payment	—	—		—		—		482	(27)		(27)
Shares issued for bonus settlement and director stipends	2,685	—		85		—		—	—		85
Balance at September 30, 2023	19,771,636	$	20	$	448,443	$	(19,185)	5,575,275	$	(270,417)	$	158,861


	Nine months ended September 30, 2022

	Common Stock			Additional		Retained		Treasury Stock
	Shares	Amount		Paid-In Capital		Earnings		Shares	Amount		Total
Balance at December 31, 2021	19,589,422	$	20	$	430,449	$	211,829	5,568,983	$	(269,031)	$	373,267
Net income	—	—		—		318		—	—		318
Stock-based compensation	—	—		1,963		—		—	—		1,963
Exercise of employee stock options	20,683	—		1,138		—		—	—		1,138
Restricted stock issued	16,306	—		—		—		—	—		—
Restricted stock surrendered for employee tax payment	—	—		—		—		5,179	(572)		(572)
Shares issued for bonus settlement and director stipends	732	—		86		—		—	—		86
Balance at March 31, 2022	19,627,143	$	20	$	433,636	$	212,147	5,574,162	$	(269,603)	$	376,200
Net income	—	—		—		3,328		—	—		3,328
Stock-based compensation	—	—		2,363		—		—	—		2,363
Exercise of employee stock options	16	—		—		—		—	—		—
Restricted stock forfeited	(551)	—		—		—		—	—		—
Restricted stock surrendered for employee tax payment	—	—		—		—		322	(36)		(36)
Shares issued for bonus settlement and director stipends	1,000	—		85		—		—	—		85
Balance at June 30, 2022	19,627,608	$	20	$	436,084	$	215,475	5,574,484	$	(269,639)	$	381,940
Net loss	—	—		—		(28,505)		—	—		(28,505)
Stock-based compensation	—	—		570		—		—	—		570
Exercise of employee stock options	3,381	—		100		—		—	—		100
Restricted stock issued	914	—		—		—		—	—		—
Restricted stock surrendered for employee tax payment	—	—		—		—		421	(42)		(42)
Shares issued for bonus settlement and director stipends	846	—		85		—		—	—		85
Balance at September 30, 2022	19,632,749	$	20	$	436,839	$	186,970	5,574,905	$	(269,681)	$	354,148

See accompanying notes to the unaudited condensed consolidated financial statements.

ModivCare Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements

September 30, ~~2017~~

~~(in thousands except years, share and per share data)~~2023

1. Organization and Basis of Presentation

Description of Business

~~The Providence Service Corporation (“we”,~~ModivCare Inc. ("ModivCare" or the ~~“Company” or “Providence”~~"Company")~~, through its subsidiaries and other companies in which it owns interests,~~ is ~~primarily engaged in the provision~~a technology-enabled healthcare services company that provides a suite of ~~healthcare and workforce development services~~integrated supportive care solutions for public and private ~~sector entities seeking~~payors and their members. Its value-based solutions address the social determinants of health ("SDoH") by connecting members to ~~control~~essential care services. By doing so, ModivCare helps health plans manage risks, reduce costs, and ~~promote positive~~improve overall health outcomes. ~~The subsidiaries and other companies in which the Company holds interests comprise the following segments:~~

~~Non-Emergency Transportation Services (“NET Services”) – Nationwide~~ModivCare is a provider of non-emergency medical transportation ~~programs for state governments~~("NEMT"), personal care services ("PCS"), and ~~managed~~remote patient monitoring ("RPM") solutions, which serve similar, highly vulnerable patient populations. The technology-enabled operating model in its NEMT segment includes the coordination of non-emergency medical transportation services supported by an infrastructure of core competencies in risk underwriting, contact center management, network credentialing and claims management. Additionally, its personal care ~~organizations.~~services include placements of non-medical personal care assistants, home health aides and nurses primarily to Medicaid patient populations in need of care monitoring and assistance performing daily living activities in the home setting. ModivCare’s remote patient monitoring services include personal emergency response systems, vitals monitoring, medication management and data-driven patient engagement solutions.

Workforce Development Services (“WD Services”) – Global provider of employment preparation and placement and legal offender rehabilitation services to eligible participants of government sponsored programs.

~~Matrix Investment – Minority~~ModivCare also holds a 43.6% minority interest in ~~nationwide provider~~CCHN Group Holdings, Inc. and its subsidiaries, which operates under the Matrix Medical Network brand (“Matrix”). Matrix, which is included in our Corporate and Other segment, maintains a national network of community-based clinicians who deliver in-home ~~care optimization~~ and ~~management solutions, including comprehensive health assessments, to members of managed care organizations, accounted for as an equity method investment.~~on-site services.

Basis of Presentation

The Company follows accounting standards ~~set~~established by the Financial Accounting Standards Board (“FASB”). The FASB establishes accounting principles generally accepted in the United States (“GAAP”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under the authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. References to GAAP issued by ~~the~~ FASB in these ~~footnotes~~notes are to the FASB Accounting Standards Codification (“ASC”), which serves as the single source of authoritative ~~non-SEC~~ accounting and applicable reporting standards to be applied byfor non-governmental entities. All amounts are presented in ~~United States (“~~U.S.”) dollars unless otherwise noted.

The ~~Company’s~~accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information, and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for the fair presentation of the results of the interim periods have been included.

The Company has made estimates relating to the reporting of assets and liabilities, revenues and expenses, and certain disclosures ~~to prepare~~in the preparation of these unaudited condensed consolidated financial statements in conformity with GAAP. Actual results could differ from those estimates. Operating results for the three and nine months ended September 30, ~~2017~~2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, ~~2017.~~2023. Management has evaluated events and transactions that occurred after the balance sheet date and through the date these unaudited condensed consolidated financial statements were filed with the SEC and considered the effect of such events in the preparation of these unaudited condensed consolidated financial statements.

The unaudited condensed consolidated balance sheet at December 31, ~~2016~~2022 included in this Form 10-Q has been derived from ~~the~~ audited financial statements at that date, but does not include all the information and footnotes required by GAAP for complete financial statements. The unaudited condensed consolidated financial statements contained herein should be read in conjunction with the audited financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022.

~~The Company holds investments that are accounted~~Reclassifications: Certain prior year amounts have been reclassified to conform to current year presentation.

Impact of the COVID-19 Pandemic

On May 11, 2023, the Department of Health and Human Services ("HHS") declared the end of the public health emergency ("PHE") for ~~using~~ the ~~equity method. The Company does not control the decision-making process or business management practices of these affiliates.~~COVID-19 pandemic. While the Company has ~~access~~continued to ~~certain information~~experience increased trip volume, service hours, and ~~performs certain procedures~~patient visits each year following the pandemic, structural changes in the industry as a result of the pandemic,

as well as ongoing constraints on the labor market, specifically related to ~~review~~ the ~~reasonableness~~strain on healthcare professionals, could continue to have an adverse impact on the Company's financial statements. The Company continues to actively monitor the structural changes to the industry and the impact these have on our business and results of ~~information,~~operations with emphasis on protecting the health and safety of its employees, maximizing the availability of its services and products to support SDoH, and supporting the operational and financial stability of its business.

Federal, state, and local authorities have taken several actions designed to assist healthcare providers in providing care to COVID-19 and other patients and to mitigate the adverse economic impact of the COVID-19 pandemic. Legislative actions taken by the federal government include the CARES Act and the American Rescue Plan Act of 2021 ("ARPA"). Through the CARES Act, the federal government has authorized payments to be distributed to healthcare providers through the Public Health and Social Services Emergency Fund ("Provider Relief Fund" or "PRF"). Through ARPA the Coronavirus State and Local Fiscal Recovery Fund ("SLFRF") was established to send relief payments to state and local governments impacted by the pandemic to assist with responding to the PHE including the economic hardships that continue to impact communities and to respond to workers performing essential work during the COVID-19 PHE, including providers. These funds are not subject to repayment, provided we are able to attest to and comply with any terms and conditions of such funding, as applicable. See discussion of grant income at Note 2, Significant Accounting Policies and Recent Accounting Pronouncements.

2. Significant Accounting Policies and Recent Accounting Pronouncements

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including disclosure of contingencies, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value Measurements

The Company follows FASB ASC Topic 820, Fair Value Measurement (“ASC 820”) which establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy categorizes assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. The three levels based on the observability of inputs are defined as follows:

–Level 1: Quoted Prices in Active Markets for Identical Assets – inputs to the valuation methodology are quoted prices in active markets as of the measurement date for identical assets or liabilities.

–Level 2: Significant Other Observable Inputs – inputs to the valuation methodology are based upon quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

–Level 3: Significant Unobservable Inputs – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. As of September 30, 2023 and December 31, 2022, the carrying amount for cash and cash equivalents, accounts receivable (net of allowance for credit losses), current assets, and current liabilities was equal to or approximated fair value due to their short-term nature or proximity to current market rates. Fair values for our publicly traded debt securities are based on quoted market prices, when available. See Note 9, Debt, for the fair value of our long-term debt.

Goodwill and Intangible Assets

In accordance with ASC 350, Intangibles-Goodwill and Other, the Company ~~relies~~reviews goodwill for impairment annually, and more frequently if events and circumstances indicate that an asset may be impaired. Such circumstances could include, but are not limited to: (1) the loss or modification of significant contracts, (2) a significant adverse change in legal factors or in business climate, (3) unanticipated competition, (4) an adverse action or assessment by a regulator, or (5) a significant decline in the Company’s stock price.

When evaluating goodwill for impairment, the Company first performs qualitative assessments for each reporting unit to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the qualitative assessment suggests that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the Company performs a quantitative assessment and compares the fair value of the reporting unit to its carrying value and to the extent the carrying value is greater than the fair value, the difference is recorded as an impairment in the consolidated statements of operations.

As a result of the Company's annual goodwill assessment during the second quarter of 2023, the Company recorded a $183.1 million impairment of goodwill within its Personal Care and Remote Patient Monitoring reporting units. The Company determined that based on ~~management~~its qualitative assessment for each reporting unit, factors existed which required the Company to test its goodwill and indefinite-lived intangible assets for impairment. These factors included a decline in the market price of the Company's common stock, industry specific regulatory pressures such as Medicaid redetermination and the Centers for Medicare and Medicaid Services ("CMS") proposed ruling on Ensuring Access to Medicaid Services, and general economic and market volatility. As a result, the Company performed a quantitative assessment and determined that the goodwill at its PCS and RPM reporting units was impaired. See Note 7, Goodwill and Intangible Assets, for additional details.

Internal-use Software and Cloud Computing Arrangements

The Company develops and implements software for internal use to enhance the performance and capabilities of the technology infrastructure. The costs incurred for the development of the internal-use software are capitalized when they meet the internal-use software capitalization criteria outlined in ASC 350-40. The capitalized costs are amortized using the straight-line method over the estimated useful lives of the software, ranging from 3 to 10 years.

In addition to acquired software, the Company capitalizes costs associated with cloud computing arrangements (“CCA”) that are service contracts. The CCA includes services which are used to support certain internal corporate functions as well as technology associated with revenue-generating activities. The capitalized costs are amortized using the straight-line method over the term of the related CCA. As of September 30, 2023 and December 31, 2022, capitalized costs associated with CCA, net of accumulated amortization were $14.6 million and $11.9 million, respectively. The value of accumulated amortization as of September 30, 2023 and December 31, 2022 was $4.1 million and $2.2 million, respectively. Amortization expense during the three months ended September 30, 2023 and 2022, totaled $0.6 million and $0.5 million, respectively, and during the nine months ended September 30, 2023 and 2022, totaled $1.8 million and $0.9 million, respectively.

Revenue Recognition

Under ASC 606, the Company recognizes revenue as it transfers promised services directly to its customers at the amount that reflects the consideration to which the Company expects to be entitled in exchange for providing these ~~affiliates~~services. The Company's performance obligations are driven by its different segments of business and primarily consist of integrated service offerings to provide ~~accurate financial information prepared~~non-emergency medical transportation, personal care services, or remote monitoring services directly to its customers. The Company receives payment for providing these services from third-party payors that include federal, state, and local governmental agencies, managed care organizations, and private consumers. In the NEMT segment, the Company's performance obligation is to stand ready to perform transportation-related activities, including the management, fulfillment, and recordkeeping activities associated with such services. In the PCS segment, the Company's performance obligation is to deliver patient care services in accordance with ~~GAAP.~~the nature and frequency of services outlined in each contract. In the RPM segment, the Company's performance obligation is to stand ready to perform monitoring services in the form of personal emergency response system monitoring, vitals monitoring, and other monitoring services, as contractually agreed upon. The Company ~~receives~~satisfies substantially all of its performance obligations over time and recognizes revenue over time instead of at points in time which aligns the pattern of transfer of promised services with the value received by the customer for the performance completed to date.

The Company holds different contract types under its different segments of business. In the NEMT segment, there are both capitated contracts, under which payors pay a fixed amount monthly per eligible member and revenue is recognized over each distinct service period, and fee-for-service ("FFS") contracts, under which the Company bills and collects a specified amount for each service that is provided and revenue is recognized using the right to invoice practical expedient. In the PCS segment, contracts are also FFS, and service revenue is reported at the estimated net realizable amount from patients and third-party payors for services rendered and revenue is recognized using the right to invoice practical expedient. Under RPM contracts, payors pay per-enrolled-member-per-month, based on enrolled membership, and revenue is recognized ratably over the contract term. For each contract type, the Company determines the transaction price based on the gross charges for services provided, reduced by estimates for contractual adjustments due to settlements of audits and payment reviews from third-party payors. The Company determines the estimated revenue adjustments at each segment based on our historical experience with various third-party payors and previous results from the claims and adjudication process. The PCS segment uses the portfolio approach to determine the estimated revenue adjustments. See further information in Note 4, Revenue Recognition.

Government Grants

The Company has received government grants primarily under the CARES Act PRF and the ARPA SLFRF to provide economic relief and stimulus to combat health and economic impacts of the COVID-19 pandemic. During the third quarter of 2023, the Company also filed amended payroll tax returns for 2020 and 2021 to claim refunds for Employee Retention Credits ("ERC"). ERC is a U.S. federal tax credit introduced to support businesses and organizations during the COVID-19 pandemic that was initially established under the CARES Act in 2020 and was later expanded and extended by subsequent legislation, including the Consolidated Appropriations Act of 2021 and the American Rescue Plan Act of 2021. The Company received distributions from these government grants of approximately $6.5 million and $1.4 million during the three months ended September 30, 2023 and 2022, respectively, of which $0.6 million and $0.8 million were recognized as grant income during the three months ended September 30, 2023 and 2022, respectively, with the remaining balance recorded in accrued expenses and other current liabilities. During the nine months ended September 30, 2023 and 2022, the Company received distributions of approximately $21.0 million and $10.4 million, respectively, of which $4.6 million was recognized as grant income during each of the the nine months ended September 30, 2023 and 2022, respectively, with the remaining balance recorded in accrued expenses and other current liabilities. Distributions received under these acts are targeted to assist with incremental health care related expenses or lost revenue attributable to the COVID-19 pandemic as well as provide stimulus to support long-term growth and recovery.

The payments from these acts are subject to certain restrictions and possible recoupment if not used for designated purposes. As a condition to receiving PRF distributions, providers must agree to certain terms and conditions, including, among other things, that the funds are being used for healthcare related expenses and lost revenues attributable to COVID-19, as defined by HHS. All recipients of PRF payments are required to comply with the reporting requirements described in the terms and conditions and as determined by HHS. The Company has submitted the required documents to meet reporting requirements for the applicable reporting periods. The Company received an audit ~~reports relating~~inquiry letter from HHS related to ~~such~~one of the business units that received PRF payments, to which the Company has responded and submitted all requested information and believes that the payments received are substantiated and within the terms and conditions defined by HHS and continues to include these amounts as grant income. At this time, the Company is unaware of any other pending or upcoming audits or inquiries related to amounts received under PRF.

As a condition to receiving SLFRF distributions, providers must agree to use the funds to respond to the PHE or its negative economic impacts, to respond to workers performing essential work by providing premium pay to eligible workers and to offset reduction in revenue due to the COVID-19 PHE as stipulated by the states in which the funds were received. All recipients of SLFRF payments are required to comply with the reporting requirements that the state in which the funds originated has requested in order for the states to meet the requirements as described in the terms and conditions as determined by the Department of the Treasury. The Company has complied with all known reporting requirements to date.

The Company recognizes distributions from government grants as grant income or accrued expenses and other current liabilities in line with the loss of revenues or expenses for which the grants are intended to compensate when there is reasonable assurance that it has complied with the conditions associated with the grant.

Recent Accounting Pronouncements

The company did not adopt any material new accounting standards during the nine months ended September 30, 2023.

3. Segments

The Company’s reportable segments are identified based on a number of factors related to how its chief operating decision maker ("CODM") determines the allocation of resources and assesses the performance of the Company’s operations. The CODM uses service revenue, net and operating income as the measures of profit or loss to assess segment performance and allocate resources, and uses total assets as the measure of assets attributable to each segment. The Company's operating income for the reportable segments includes an allocated portion of corporate expenses to the respective segments and includes revenues and all other costs directly attributable to the specific segment. The Company’s reportable segments are strategic units that offer different services under different financial and operating models to the Company’s customers. The Company's CODM manages the Company under four reportable segments.

•NEMT - The Company's NEMT segment is the largest manager of non-emergency medical transportation programs for state governments and managed care organizations, or MCOs, in the U.S. This segment also holds the results of the Company's captive insurance program;

•PCS - The Company's PCS segment provides in home personal care services to State and Managed Medicaid, Medicare, and Private Pay patient populations in need of care monitoring and assistance performing activities of daily living;

•RPM - The Company's RPM segment is a provider of remote patient monitoring solutions, including personal emergency response systems, vitals monitoring and data-driven patient engagement solutions;

•Corporate and Other - The Company's Corporate and Other segment includes the costs associated with the Company's corporate operations as well as the results of an investment in innovation related to our data analytics capabilities that the Company made at the end of the first quarter of 2023, which contributes to service revenue and service expense. The operating results of the Corporate and Other segment include activities related to executive, accounting, finance, internal audit, tax, legal and certain strategic and corporate development functions for each segment, the results of this investment in innovation, as well as the results of the Company's Matrix investment.

The following table sets forth certain financial information from the affiliates’ independent auditors on an annual basis. The Company is not aware of any errors in or possible misstatements of the financial information provided by its equity affiliates that would have a material effect onoperations attributable to the Company’s ~~condensed consolidated financial statements.~~

~~Reclassifications~~

We have reclassified certain amounts relating to our prior period results to conform to our current period presentation. On October 19, 2016, affiliates of Frazier Healthcare Partners purchased a 53.2% equity interest in CCHN Group Holdings, Inc. and its subsidiaries (“Matrix”) with Providence retaining a 46.8% equity interest (the “Matrix Transaction”). Prior to the closing of the Matrix Transaction, the financial results of Matrix were included in the Company’s Health Assessment Services (“HA Services”) segment. Operating results for this segment are reported as discontinued operations, net of tax in the condensed consolidated statements of incomebusiness segments for the three and nine months ended September 30, ~~2016. See Note~~ 2023 and 2022 (in thousands):


	Three months ended September 30, 2023
	NEMT		PCS		RPM		Corporate and Other		Total
Service revenue, net	$	485,951	$	179,979	$	19,779	$	1,216	$	686,925
Grant income(1)	—		551		—		—		551

Service expense	428,021		143,078		6,934		1,181		579,214
General and administrative expense	25,433		20,252		5,685		18,772		70,142
Depreciation and amortization	6,814		12,850		6,174		239		26,077

Operating income (loss)	$	25,683	$	4,350	$	986	$	(18,976)	$	12,043

Equity in net income (loss) of investee, net of tax	$	142	$	—	$	—	$	(302)	$	(160)
Equity investment	$	1,552	$	—	$	—	$	43,655	$	45,207
Goodwill	$	135,186	$	415,444	$	234,894	$	30	$	785,554
Total assets	$	512,032	$	774,731	$	346,257	$	130,066	$	1,763,086


	Nine months ended September 30, 2023
	NEMT		PCS		RPM		Corporate and Other		Total
Service revenue, net	$	1,452,389	$	534,435	$	57,702	$	3,812	$	2,048,338
Grant income(1)	—		4,649		—		—		4,649

Service expense	1,277,604		417,636		20,129		3,366		1,718,735
General and administrative expense	87,645		63,480		16,781		61,189		229,095
Depreciation and amortization	20,319		38,590		18,087		683		77,679
Impairment of goodwill	—		137,331		45,769		—		183,100
Operating income (loss)	$	66,821	$	(117,953)	$	(43,064)	$	(61,426)	$	(155,622)

Equity in net income of investee, net of tax	$	984	$	—	$	—	$	1,837	$	2,821
Equity investment	$	1,552	$	—	$	—	$	43,655	$	45,207
Goodwill	$	135,186	$	415,444	$	234,894	$	30	$	785,554
Total assets	$	512,032	$	774,731	$	346,257	$	130,066	$	1,763,086

13~~Discontinued Operations,~~


	Three months ended September 30, 2022
	NEMT		PCS		RPM		Corporate and Other		Total
Service revenue, net	$	459,796	$	169,226	$	18,760	$	—	$	647,782
Grant income(1)	—		789		—		—		789

Service expense	394,981		132,746		6,836		—		534,563
General and administrative expense	31,815		22,057		5,816		16,201		75,889
Depreciation and amortization	7,079		12,919		5,467		207		25,672
Operating income (loss)	$	25,921	$	2,293	$	641	$	(16,408)	$	12,447

Equity in net income (loss) of investee, net of tax	$	208	$	—	$	—	$	(26,656)	$	(26,448)
Equity investment	$	208	$	—	$	—	$	43,269	$	43,477
Goodwill	$	135,186	$	552,775	$	280,429	$	30	$	968,420
Total assets	$	517,930	$	962,425	$	402,929	$	106,561	$	1,989,845


	Nine months ended September 30, 2022
	NEMT		PCS		RPM		Corporate and Other		Total
Service revenue, net	$	1,309,449	$	491,661	$	49,362	$	—	$	1,850,472
Grant income(1)	—		4,587		—		—		4,587

Service expense	1,100,801		379,423		17,884		—		1,498,108
General and administrative expense	102,736		68,536		17,520		43,316		232,108
Depreciation and amortization	21,576		37,976		14,201		623		74,376
Operating income (loss)	$	84,336	$	10,313	$	(243)	$	(43,939)	$	50,467

Equity in net income (loss) of investee, net of tax	$	143	$	—	$	—	$	(28,163)	$	(28,020)
Equity investment	$	208	$	—	$	—	$	43,269	$	43,477
Goodwill	$	135,186	$	552,775	$	280,429	$	30	$	968,420
Total assets	$	517,930	$	962,425	$	402,929	$	106,561	$	1,989,845

(1) Grant income for ~~further information~~.the PCS segment includes funding received on a periodic basis from the PRF in relation to relief under the CARES Act and funding received from the SLFRF under ARPA in relation to economic recovery to combat health and economic impacts of the COVID-19 pandemic. See Note 2, Significant Accounting Policies and Recent Accounting ~~Pronouncements~~,Pronouncements.

4. Revenue Recognition

Under ASC 606, the Company recognizes revenue as it transfers promised services to its customers and generates all of its revenue from contracts with customers. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled in exchange for these services. The Company satisfies substantially all of its performance obligations over time and recognizes revenue over time instead of at points in time.

Revenue Contract Structure

NEMT Capitated Contracts (per-member-per-month)

Under capitated contracts, payors pay a fixed amount per eligible member per month. Capitation rates are generally based on expected costs and volume of services. We assume the responsibility of meeting the covered healthcare related

transportation requirements based on per-member, per-month fees for the number of eligible members in the payor’s program. Revenue is recognized based on the population served during the period. Certain capitated contracts have provisions for reconciliations, risk corridors or profit rebates. For contracts with reconciliation provisions, capitation payment is received as a prepayment during the month service is provided. These prepayments are reconciled based on actual cost and/or trip volume and may result in refunds to the payor, or additional ~~information~~payments due from the payor. Contracts with risk corridor or profit rebate provisions allow for profit within a certain corridor and once we reach profit level maximums, we discontinue recognizing revenue and instead record a liability within the accrued contract payable account. This liability may be reduced through future increases in trip volume or periodic settlements with the payor. While a profit rebate provision could only result in a liability from this profit threshold, a risk corridor provision could potentially result in receivables if the Company does not reach certain profit minimums, which would be recorded in the reconciliation contract receivables account.

NEMT Fee-for-service Contracts

Fee-for-service ("FFS") revenue represents revenue earned under non-capitated contracts in which we bill and collect a specified amount for each service that we provide. FFS revenue is recognized in the period in which the services are rendered and is reduced by the estimated impact of contractual allowances.

PCS Fee-for-service Contracts

PCS FFS revenue is reported at the estimated net realizable amount from clients, patients and third-party payors for services rendered based on actual personal care hours provided. Payment for services received from third-party payors includes, but is not limited to, insurance companies, hospitals, governmental agencies and other ~~reclassifications.~~home health care providers who subcontract work to the Company. Certain contracts are subject to retroactive review and possible adjustment by those payors based on the nature of the contract or costs incurred. The Company makes estimates of retroactive adjustments and considers these in the recognition of revenue in the period in which the related services are rendered. The difference between estimated settlement and actual settlement is reported in net service revenues as adjustments become known or as years are no longer subject to such audits, reviews, or investigations.

RPM per-member-per-month Contracts

~~2. Significant Accounting Policies~~

RPM per-member-per-month ("PMPM") revenue consists of revenue from monitoring services provided to the customer. Under RPM contracts, payors pay per-enrolled-member-per-month based on enrolled membership. Consideration is generally fixed for each type of monitoring service and ~~Recent Accounting Pronouncements~~revenue is recognized ratably over the contract term based on the monthly fee paid by customers.

Disaggregation of Revenue by Contract Type

The ~~Company adopted the~~ following ~~accounting pronouncements during the nine months ended September 30, 2017:~~

~~In November 2015, the FASB issued Accounting Standards Update (“ASU”) No. 2015-17,~~ ~~Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes~~ (“ASU 2015-17”), which changes how deferred taxes are classified on organizations’ balance sheets. The ASU eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent. The amendments apply to all organizations that present a classified balance sheet. For public companies, the amendments are effective for financial statements issued for annual periods beginning after December 16, 2016, and interim periods within those annual periods. The Company adopted ASU 2015-17 retrospectively on January 1, 2017, which resulted in the reclassification of the December 31, 2016 deferred tax assets-current balance of $6,825 and non-current deferred tax assets of $2,493 to long-term deferred tax liabilities in the amount of $9,318.

~~In March 2016, the FASB issued ASU No. 2016-07,~~ ~~Investments - Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting~~ (“ASU 2016-07”). ASU 2016-07 eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. ASU 2016-07 instead specifies that the investor should add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and apply the equity method of accounting as of the date the investment became qualified for equity method accounting. ASU 2016-07 is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 and should be applied prospectively. The Company adopted ASU 2016-07 on January 1, 2017. The adoption of ASU 2016-07 had no impact on the Company’s financial statements or disclosures.

~~In March 2016, the FASB issued ASU No. 2016-09,~~ ~~Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~ (“ASU 2016-09”). ASU 2016-09 is intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including income tax consequences, classification of awards as either equity or liabilities and classification in the statement of cash flows. For public companies, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company adopted ASU 2016-09 on January 1, 2017, and elected to recognize forfeitures as they occur. As a result, the Company recorded a cumulative effect adjustment of $850 to retained earnings as of January 1, 2017. Upon adoption, all excess tax benefits and tax deficiencies related to employee share-based payments are recognized through income tax expense prospectively. For the three and nine months ended September 30, 2017, the Company recorded excess tax deficiencies of $261 and $148, respectively, as an increase to the provision for income taxes. The Company excluded the related tax benefits when applying the treasury stock method for computing diluted shares outstanding on a prospective basis resulting in a decrease in diluted weighted average shares outstanding of 4,779 and 7,451 shares, respectively,table summarizes disaggregated revenue from contracts with customers by contract type for the three and nine months ended September 30, ~~2017.~~2023 and September 30, 2022 (in thousands):

~~The adoption of ASU 2016-09 subjects our tax rate to quarterly volatility~~


	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
NEMT capitated contracts	$	412,762	$	399,859	$	1,239,957	$	1,145,694
NEMT FFS contracts	73,189		59,937		212,432		163,755
Total NEMT service revenue, net	485,951		459,796		1,452,389		1,309,449

PCS FFS contracts	179,979		169,226		534,435		491,661
RPM PMPM contracts	19,779		18,760		57,702		49,362
Other service revenue	1,216		—		3,812		—
Total service revenue, net	$	686,925	$	647,782	$	2,048,338	$	1,850,472

Payor Information

Service revenue, net, is derived from state and managed Medicaid contracts, managed Medicare contracts, as well as a small amount from private pay and other contracts. Of the ~~effects of stock award exercises~~NEMT segment’s revenue, 11.4% and ~~vesting activities, including~~10.4% were derived from one payor for the adverse impact on our income tax provision for awards which result in a tax deduction less than the amount recorded for financial reporting purposes based upon the fair value of the award at the grant date. For example, no shares will be distributed under the Company’s 2015 Holding Company LTI Program (the “HoldCo LTIP”) unless the volume weighted average of Providence’s stock price over a 90-day period ending on December 31, 2017 exceeds $56.79. If this market condition is not satisfied, a significant tax shortfall will result, causing an adverse impact on our tax provision.

~~The Company elected to apply the change in classification of cash flows resulting~~three months ended September 30, 2023 and 2022, respectively, and 11.2% and 11.0% were derived from excess tax benefits or deficiencies on a retrospective basis. This resulted in an increase in cash flows provided by operating activities of $276 and an increase of $276 in cash flows used in financing activities in the condensed consolidated statement of cash flowsone payor for the nine months ended September 30, ~~2016. Additionally, ASU 2016-09 requires that employee taxes paid when an employer withholds shares~~2023 and 2022, respectively. Of the PCS segment's revenue, 11.4% and 12.1% were derived from one payor for ~~tax-withholding purposes be reported as financing activities in~~ the ~~consolidated statements of cash flows, which is how~~three months ended September 30, 2023 and 2022, respectively, and 11.3% and 12.0%

were derived from one payor for the nine months ended September 30, 2023 and 2022, respectively. Of the RPM segment's revenue, 19.3% and 18.4% were derived from one payor for the three months ended September 30, 2023 and 2022, respectively, and 17.4% and 20.4% were derived from one payor for the nine months ended September 30, 2023 and 2022, respectively.

Revenue Adjustments

During the three months ended September 30, 2023 and 2022, the Company ~~has historically classified these amounts.~~recognized a reduction of $0.8 million and an increase of $1.7 million in service revenue, respectively, from contractual adjustments relating to performance obligations satisfied in previous periods to which the payor agreed. During the nine months ended September 30, 2023 and 2022, the Company recognized a reduction of $3.9 million and an increase of $6.5 million in service revenue, respectively, from contractual adjustments relating to performance obligations satisfied in previous periods to which the payor agreed.

~~In January 2017, the FASB issued ASU No. 2017-01,~~ ~~Business Combinations (Topic 805):Clarifying the Definition of a Business~~ (“ASU 2017-01”). ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Related Balance Sheet Accounts

The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. ASU 2017-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. following table provides information about accounts receivable, net (in thousands):


	September 30, 2023		December 31, 2022
Accounts receivable	$	204,097	$	225,288
Allowance for doubtful accounts	(1,396)		(2,078)
Accounts receivable, net	$	202,701	$	223,210

The ~~Company adopted ASU 2017-01 on April 1, 2017. The adoption of ASU 2017-01 had no impact~~following table provides information about other revenue related accounts included on the ~~Company’s financial statements or disclosures.~~accompanying unaudited condensed consolidated balance sheets (in thousands):


	September 30, 2023		December 31, 2022
Accrued contract payables(1)	$	133,576	$	194,287
Contract receivables(2)	$	129,275	$	71,131
Long-term contract receivables(3)	$	—	$	427
Deferred revenue, current	$	2,008	$	2,202

~~In January 2017,~~(1) Accrued contract payables primarily represent overpayments and liability reserves on certain risk corridor, profit rebate and reconciliation contracts. See the ~~FASB issued ASU No. 2017-04,~~ ~~Intangibles-Goodwill~~contract payables and ~~Other (Topic 350):Simplifying~~receivables activity below.

(2) Contract receivables primarily represent underpayments and receivables on certain risk corridor, profit rebate, and reconciliation contracts. See the ~~Test for Goodwill Impairment~~ ~~(“ASU 2017-04”)~~. ~~ASU 2017-04 removes~~contract payables and receivables activity below.

(3) Long-term contract receivables primarily represent future receivable balances on certain risk corridor, profit rebate and reconciliation contracts that may be received in greater than 12 months.

The following table provides the ~~requirement to compare~~summary activity of total contract payables and receivables as reported within the ~~implied fair value~~unaudited condensed consolidated balance sheets (in thousands):


	December 31, 2022		Additional Amounts Recorded		Amounts Paid or Settled		March 31, 2023
Reconciliation contract payables	$	25,853	$	1,811	$	(18,110)	$	9,554
Profit rebate/corridor contract payables	155,161		22,316		(10,873)		166,604
Overpayments and other cash items	13,273		799		(2,610)		11,462
Total contract payables	$	194,287	$	24,926	$	(31,593)	$	187,620

Reconciliation contract receivables	$	48,153	$	22,204	$	(5,922)	$	64,435
Corridor contract receivables	23,405		14,508		—		37,913
Total contract receivables	$	71,558	$	36,712	$	(5,922)	$	102,348


	March 31, 2023		Additional Amounts Recorded		Amounts Paid or Settled		June 30, 2023
Reconciliation contract payables	$	9,554	$	6,687	$	(2,749)	$	13,492
Profit rebate/corridor contract payables	166,604		17,447		(98,683)		85,368
Overpayments and other cash items	11,462		2,707		(3,935)		10,234
Total contract payables	$	187,620	$	26,841	$	(105,367)	$	109,094

Reconciliation contract receivables	$	64,435	$	16,686	$	(15,105)	$	66,016
Corridor contract receivables	37,913		16,290		(456)		53,747
Total contract receivables	$	102,348	$	32,976	$	(15,561)	$	119,763


	June 30, 2023		Additional Amounts Recorded		Amounts Paid or Settled		September 30, 2023
Reconciliation contract payables	$	13,492	$	4,763	$	(3,034)	$	15,221
Profit rebate/corridor contract payables	85,368		10,614		(1,840)		94,142
Overpayments and other cash items	10,234		16,313		(2,334)		24,213
Total contract payables	$	109,094	$	31,690	$	(7,208)	$	133,576

Reconciliation contract receivables	$	66,016	$	14,180	$	(19,460)	$	60,736
Corridor contract receivables	53,747		14,792		—		68,539
Total contract receivables	$	119,763	$	28,972	$	(19,460)	$	129,275

5. Equity Investment

As of goodwill with its carrying amount as part of step two of the goodwill impairment test. As a result, under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amountSeptember 30, 2023 and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the impairment loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This guidance is effective prospectively for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. The Company adopted ASU 2017-04 on April 1, 2017. The adoption of ASU 2017-04 had no impact on the Company’s financial statements or disclosures.

~~Updates to the recent accounting pronouncements as disclosed in the Company’s Form 10-K for the year ended~~ December 31, ~~2016 are as follows:~~

~~In May 2014, the FASB issued ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ ~~(“ASU 2014-09”)~~. ASU 2014-09 introduced FASB Accounting Standards Codification Topic 606 (“ASC 606”), which will replace most currently applicable existing revenue recognition guidance and is intended to improve and converge with international standards the financial reporting requirements for revenue from contracts with customers. The core principle of ASU 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASU 2014-09 also requires additional disclosures about the nature, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU 2014-09 allows for adoption either on a full retrospective basis to each prior reporting period presented or on a modified retrospective basis with the cumulative effect of initially applying the new guidance recognized at the date of initial application, which will be effective for the Company beginning January 1, 2018.

The Company has developed an adoption plan, assembled a cross-functional project team and is in the process of assessing the impacts of applying ASC 606 to the Company’s financial statements, information systems and internal controls. The Company has elected to adopt ASU 2014-09 using the modified retrospective method. Additionally, the Company has performed detailed reviews of a significant number of its existing contracts with customers. These reviews have focused on several key considerations which could impact the Company's accounting and reporting under the new standard:

~~the effect of specified clauses on the term of many of the Company’s contracts with customers;~~

~~the nature of the promises in many of the Company’s contracts with customers to perform integrated services over a period of time;~~

~~whether and how much variable consideration to include when determining the transaction prices for its contracts with customers;~~

~~whether any of the Company’s customer contracts require performance over a series of distinct service periods and the impact on determining and allocating the transaction price; and~~

the manner in which the Company will measure its progress towards fully satisfying its performance obligations, including a determination of whether the Company may be able to use certain practical expedients.

These reviews are substantially complete for NET Services and are ongoing for WD Services. The Company expects little to no impact within NET Services from the adoption of ASU 2014-09, and is implementing controls and process changes needed to apply ASC 606. Within WD Services, the Company expects certain amounts of variable consideration related to contingent revenue will be accelerated. Such amounts were previously deferred until the final resolution of the contingency. Management’s assessment is ongoing; however, management does not believe the impact of ASC 606 on its financial statements will be significant based on the procedures performed to date.

~~In January 2017, the FASB issued ASU No. 2017-03,~~ ~~Accounting Changes and Error Corrections (Topic 250) and Investments - Equity Method and Joint Ventures (Topic323)~~ (“ASU 2017-03”). ASU 2017-03 expands required qualitative disclosures when registrants cannot reasonably estimate the impact that adoption of an ASU will have on the financial statements. Such qualitative disclosures would include a comparison of the registrant’s new accounting policies, if determined, to current accounting policies, a description of the status of the registrant’s process to implement the new standard and a description of the significant implementation matters yet to be addressed by the registrant. Other than enhancements to the qualitative disclosures regarding future adoption of new ASUs, adoption of the provisions of this standard is not expected to have any impact on the Company’s consolidated financial statements.

~~In May 2017, the FASB issued ASU No. 2017-09,~~ ~~Compensation–Stock Compensation (Topic 718):Scope of Modification Accounting~~ (“ASU 2017-09”). ASU 2017-09 provides guidance about which changes to the terms of a share-based payment award should be accounted for as a modification. A change to an award should be accounted for as a modification unless the fair value of the modified award is the same as the original award, the vesting conditions do not change, and the classification as an equity or liability instrument does not change. This guidance is effective for fiscal years beginning after December 15, 2017. Early adoption is permitted. The adoption of ASU 2017-09 is not expected to have a material impact on the Company’s consolidated financial statements.

~~There were no other significant updates to the new accounting guidance not yet adopted by the Company as disclosed in its Form 10-K for the year ended December 31, 2016.~~

~~3. Equity Investment~~

~~Matrix~~

Prior to the closing of the Matrix Transaction on October 19, 2016, the financial results of Matrix were included in the Company’s HA Services segment. Subsequent to the closing of the Matrix Transaction,2022, the Company owned a ~~46.8% noncontrolling interest in Matrix. As of September 30, 2017, the Company owned a 46.6% noncontrolling~~43.6% non-controlling interest in Matrix. Pursuant to a Shareholder’s Agreement, affiliates of Frazier Healthcare Partners hold rights necessary to control the fundamental operations of Matrix. The Company accounts for ~~this~~its investment in Matrix under the equity method of accounting and the Company’s share of Matrix’s income or losses are recorded as “Equity in net ~~(gain) loss~~income (loss) of ~~investees”~~investee, net of tax” in the accompanying unaudited condensed consolidated statements of ~~income.~~operations. During the year ended December 31, 2022, Matrix recorded asset impairment charges of $82.2 million, of which the entire asset impairment charge was recorded during the three and nine months ended September 30, 2022. No asset impairment charges were recorded for the three or nine months ended September 30, 2023.

The Company's gross share of its Matrix's operations for the three months ended September 30, 2023 and September 30, 2022 was a loss of $0.4 million and a loss of $36.1 million, respectively, which is presented net of tax on the unaudited condensed consolidated statements of operations for a loss of $0.3 million and a loss of $26.7 million, respectively. The Company's gross share of its Matrix's operations for the nine months ended September 30, 2023 and September 30, 2022 was income of $2.5 million and a loss of $39.0 million, respectively, which is presented net of tax on the unaudited condensed consolidated statements of operations for income of $1.8 million and a loss of $28.2 million, respectively.

The carrying amount of the assets included in the Company’s unaudited condensed consolidated balance ~~sheet~~sheets and the maximum loss exposure related to the Company’s interest in Matrix as of September 30, ~~2017~~2023 and December 31, ~~2016~~2022 totaled ~~$156,883~~$45.2 million and ~~$157,202,~~$41.3 million, respectively.

Summary financial information for Matrix on a standalone basis is as ~~follows:~~follows (in thousands):


	September 30, 2023		December 31, 2022
Current assets	$	112,994	$	97,750
Long-term assets	$	355,143	$	373,297
Current liabilities	$	34,955	$	36,913
Long-term liabilities	$	317,806	$	325,613

September 30, 2017 December 31, 2016
Current assets $ 50,015
$ 28,589
Long-term assets 598,842
614,841
Current liabilities 39,273
25,791
Long-term liabilities 270,816
281,348


	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Revenue	$	84,395	$	76,461	$	252,973	$	235,582
Operating income (loss)	$	7,593	$	(79,992)	$	32,196	$	(81,604)
Net income (loss)	$	(239)	$	(85,081)	$	6,976	$	(93,211)

Three months ended
September 30, 2017
Revenue $ 58,639
Operating income 3,159
Net loss (537 )

Nine months ended
September 30, 2017
Revenue $ 175,346
Operating income 10,109
Net loss (775 )

~~See Note 13,~~ ~~Discontinued Operations, for Matrix’s 2016 results of operations.~~

~~Mission Providence~~

The Company entered into a joint venture agreement in November 2014 with Mission Australia ACN ("Mission Australia") to form Mission Providence Pty Ltd (“Mission Providence”). Mission Providence delivers employment preparation and placement services in Australia. The Company had a 60% ownership interest in Mission Providence, and had rights to 75% of Mission Providence’s distributions of cash or profit surplus twice per calendar year. The Company accounted for this investment under the equity method of accounting and the Company’s share of Mission Providence’s income or losses was recorded as ��Equity in net (gain) loss of investees” in the accompanying condensed consolidated statements of income. Cash contributions made to Mission Providence in exchange for its equity interests are included in the condensed consolidated statements of cash flows as “Equity investments.”

On September 29, 2017, the Company and Mission Australia completed the sale of 100% of the stock of Mission Providence pursuant to a share sale agreement. Upon the sale of Mission Providence, the Company received AUD 20,184, or $15,823 of proceeds, for its equity interest, net of transaction fees. The related gain on sale of Mission Providence totaling $12,606 is recorded as “Gain on sale of equity investment” in the accompanying condensed consolidated statements of income. The carrying amount of the assets included in the Company’s condensed consolidated balance sheet related to the Company’s interest in Mission Providence was $4,021 at December 31, 2016.

~~Summary financial information for Mission Providence on a standalone basis is as follows:~~

December 31, 2016
Current assets $ 4,640
Long-term assets 10,473
Current liabilities 12,844
Long-term liabilities 1,655

Three months ended September 30,
2017 2016
Revenue $ 10,244
$ 9,349
Operating loss (599 ) (2,903 )
Net loss (651 ) (2,059 )

Nine months ended September 30,
2017 2016
Revenue $ 30,125
$ 26,475
Operating loss (1,765 ) (10,697 )
Net loss (1,934 ) (7,627 )

4.6. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets were comprised of the ~~following:~~following (in thousands):


	September 30, 2023		December 31, 2022
Prepaid insurance	$	8,251	$	6,334
Deferred ERP implementation costs	5,070		5,817
Prepaid income taxes	4,075		7,186
Deferred financing costs on credit facility	2,864		3,061
Inventory	2,261		2,041
Prepaid rent	1,152		278
Other prepaid expenses	14,896		9,615
Total prepaid expenses and other current assets	$	38,569	$	34,332

7. Goodwill and Intangible Assets

September 30,
2017 December 31,
2016
Prepaid income taxes $ 3,819
$ 1,467
Escrow funds 10,000
10,000
Prepaid insurance 2,778
3,153
Prepaid taxes and licenses 2,526
3,570
Note receivable 3,201
3,130
Prepaid rent 2,727
2,013
Deposits held for leased premises and bonds 2,744
2,609
Other 11,288
11,953
Total prepaid expenses and other $ 39,083
$ 37,895

The Company tests goodwill for impairment for its reporting units annually as of July 1 or more frequently when events or changes in circumstances indicate that impairment may have occurred. The Company reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset group may not be recoverable.

~~Escrow funds represent amounts related~~

Goodwill

During the second quarter of 2023, the Company recorded a $183.1 million impairment of goodwill within its Personal Care and Remote Patient Monitoring reporting units. This impairment was driven primarily by macroeconomic factors, including a decline in the market value of the Company's common stock. After recording these impairments, the associated reporting units have $650.3 million of goodwill remaining. If, among other factors, (i) the Company's equity values were to ~~potential indemnification claims~~decline significantly, (ii) the Company experienced additional adverse impacts associated with macroeconomic factors, including increases in our estimated weighted average cost of capital, or (iii) the adverse impacts stemming from competition, economic, regulatory or other factors were to cause the Company's results of operations or cash flows to be worse than currently anticipated, the Company could conclude in future periods that additional impairment charges of certain reporting units are required in order to reduce the carrying values of goodwill. Any such impairment charges could be significant.

The Company performed a quantitative test comparing the carrying value of the Company's reporting units with their respective fair value. The fair value of the Company's reporting units was estimated using both the income approach and the market valuation approach. The income approach produces an estimated fair value of a reporting unit based on the present value of the cash flows the Company expects the reporting unit to generate in the future. Estimates included in the discounted cash flow model are primarily Level 3 inputs and include the discount rate, which the Company determines based on adjusting an industry-wide weighted-average cost of capital for size, geography, and company specific risk factors, long-term rates of growth and profitability of the Company’s business, working capital effects and planned capital expenditures. The market approach produces an estimated fair value of a reporting unit based on a comparison of the reporting unit to comparable publicly traded entities in similar lines of business. The Company’s significant estimates in the market approach include the selected similar companies with comparable business factors such as size, growth, profitability, risk and return on investment and the multiples the Company applies to earnings before interest, taxes, depreciation and amortization (“EBITDA”) to estimate the fair value of the reporting unit.

Changes in key assumptions from the ~~sale~~prior year annual goodwill assessment and the resulting reduction in projected future cash flows included in the current year goodwill test resulted in a decrease in the fair values of the ~~Human Services segment, which~~Company's PCS and RPM reporting units such that the fair value of each respective reporting unit was ~~completed on November 1, 2015. The~~less than its respective carrying value. As a

result, during the second quarter of 2023, the Company ~~has accrued $15,000 as~~recorded a ~~contingent liability for~~non-cash goodwill impairment charge of $137.3 million in the ~~settlement of potential indemnification claims,~~PCS reporting unit and $45.8 million in the RPM reporting unit, which is ~~included~~recorded in ~~“Accrued expenses”~~“Impairment of goodwill” on the Company’s unaudited condensed consolidated statement of operations. No further impairment was taken during the three months ended September 30, 2023. There was no such goodwill impairment charge in the condensed consolidated balance sheet as of September 30, 2017. While the matter is not resolved, it is highly likely the escrow funds will be used to satisfy a portion of this settlement. See Note 11, ~~Commitments~~three and ~~Contingencies, for further information.~~

~~5. Accrued Expenses~~

~~Accrued expenses consisted of the following:~~

September 30,
2017 December 31, 2016
Accrued compensation $ 24,058
$ 23,050
NET Services accrued contract payments 26,504
32,836
Accrued settlement 15,000
6,000
Income taxes payable —
372
Other 37,835
40,123
Total accrued expenses $ 103,397
$ 102,381

~~6. Restructuring and Related Reorganization Costs~~

WD Services has three redundancy programs. Two redundancy plans were approved in 2015 and have been substantially completed; a plan related to the termination of employees delivering services under an offender rehabilitation program (“Offender Rehabilitation Program”) and a plan related to the termination of employees delivering services under the Company’s employability and skills training programs and certain other employees in the United Kingdom (“UK Restructuring Program”). In addition, a redundancy plan related to the termination of employees as part of a value enhancement project ("Ingeus Futures Program") to better align costs at Ingeus with revenue and to improve overall operating performance was approved in 2016. The Company recorded severance and related charges of $1,117 and $4,741 during the nine months ended September 30, 2017 and 2016, respectively, relating to the termination benefits for employee groups and specifically identified employees impacted by these plans. The severance charges incurred are recorded as “Service expense”2022.

Changes in the ~~accompanying condensed consolidated statements~~carrying value of ~~income.~~goodwill by reportable segment are presented in the following table (in thousands):


	NEMT		PCS		RPM		Corporate and Other		Total
Balance at December 31, 2022	$	135,186	$	552,775	$	280,663	$	30	$	968,654
Impairment of goodwill	—		(137,331)		(45,769)		—		(183,100)
Balance at September 30, 2023	$	135,186	$	415,444	$	234,894	$	30	$	785,554

The ~~initial estimate~~accumulated impairment losses on goodwill totaled $279.1 million as of ~~severance~~September 30, 2023 and ~~related charges~~$96.0 million as of December 31, 2022.

Intangible Assets

Intangible assets are comprised of acquired payor networks, trademarks and trade names, developed technology, non-compete agreements, licenses, and an assembled workforce. Finite-lived intangible assets are amortized using the straight-line method over the estimated economic lives of the assets. These finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the ~~plans was based upon~~carrying value of such assets may not be recoverable. Indefinite-lived intangible assets are not amortized, but are tested for impairment annually and more frequently if events occur or circumstances change that indicate an asset may be impaired. Based on the ~~employee groups impacted, average salary~~continued value of the definite-lived and ~~benefits, and redundancy benefits pursuant to~~indefinite-lived intangible assets acquired, the ~~existing policies. Additional charges above the initial estimates were incurred for the redundancy plans~~Company did not identify any circumstances during the three and nine months ended September 30, ~~2017~~2023 that would require an impairment test for our intangible assets.

8. Accrued Expenses and ~~2016 related~~Other Current Liabilities

Accrued expenses and other current liabilities were comprised of the following (in thousands):


	September 30, 2023		December 31, 2022
Accrued compensation and related liabilities	$	47,183	$	47,947
Accrued interest	24,855		10,643
Insurance reserves	19,439		17,836
Accrued operating expenses	13,788		18,432
Accrued legal fees	12,002		15,574
Accrued government grants(1)	10,970		7,367
Union pension obligation	2,970		3,665
Deferred revenue	2,008		2,202
Other	13,349		12,194
Total accrued expenses and other current liabilities	$	146,564	$	135,860

(1) Accrued government grants include payments received from government entities, primarily in relation to the ~~actualization~~PRF and SLFRF, to offset lost revenue or increased expenditures for which the related expenditure has not yet been incurred and thus the related payments are deferred as of ~~termination benefits~~September 30, 2023 and December 31, 2022.

9. Debt

Senior Unsecured Notes

Senior unsecured notes as of September 30, 2023 and December 31, 2022 consisted of the following (in thousands):


Senior Unsecured Note	Date of Issuance	September 30, 2023		December 31, 2022
$500.0 million 5.875% due November 15, 2025 (effective interest rate 6.467%)	11/4/2020	$	493,265	$	491,098
$500.0 million 5.000% due October 1, 2029 (effective interest rate 5.392%)	8/24/2021	489,365		488,263
Total		$	982,630	$	979,361

The Company pays interest on the Senior Unsecured Notes semi-annually in arrears. Principal payments are not required until the maturity date. Debt issuance costs of $14.5 million in relation to the issuance of the Senior Notes due 2025 were incurred and these costs were deferred and are amortized to interest cost over the term of the Notes. Debt issuance costs of $13.5 millionwere incurred in relation to the issuance of the Senior Notes due 2029 and these costs were deferred and are amortized to interest cost over the term of the Notes. As of September 30, 2023, $17.4 million of unamortized deferred issuance costs was netted against the long-term debt balance on the unaudited condensed consolidated balance sheets. The fair value of the Notes as of September 30, 2023 and December 31, 2022 was $836.3 million and $896.6 million, respectively, which was determined based on quoted prices in active markets, and therefore designated as Level 1 within the fair value hierarchy. The Company was in compliance with all covenants as of September 30, 2023.

Credit Facility

The Company is a party to the amended and restated credit agreement, dated as of February 3, 2022, (as amended, the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, swing line lender and an issuing bank, Wells Fargo Bank, National Association, as an issuing bank, Truist Bank and Wells Fargo Bank, National Association, as co-syndication agents, Deutsche Bank AG New York Branch, Bank of America, N.A., Regions Bank, Bank of Montreal and Capital One, National Association, as co-documentation agents, and JPMorgan Chase Bank, N.A., Truist Securities, Inc. and Wells Fargo Securities, LLC, as joint bookrunners and joint lead arrangers, and the other lenders party thereto. The Credit Agreement provides the Company with a senior secured revolving credit facility (the “Credit Facility”) in an aggregate principal amount of $325.0 million and sublimits for ~~specifically identified employees impacted~~swingline loans, letters of credit and alternative currency loans in amounts of up to $25.0 million, $60.0 million and $75.0 million, respectively. The Credit Facility matures on February 3, 2027 and the proceeds may be used (i) to finance working capital needs of the Company and its subsidiaries and (ii) for general corporate purposes of the Company and its subsidiaries (including to finance capital expenditures, permitted acquisitions and investments).

On June 26, 2023, the Company entered into an Amendment No. 1 (the "First Amendment") to the Credit Agreement which amended and restated the maximum permitted Total Net Leverage Ratio under ~~these plans,~~the Credit Agreement as ~~well~~follows: for the fiscal quarters ending June 30, 2023 through September 30, 2023, 5.25:1.00; for the fiscal quarters ending December 31, 2023 through March 31, 2024, 5.00:1.00; for the fiscal quarter ending June 30, 2024, 4.75:1.00; and for the fiscal quarters ending September 30, 2024 and for the fiscal quarters ending thereafter, 4.50:1.00.

As of September 30, 2023, the Company had $83.0 million of short-term borrowings outstanding on the Credit Facility and had $39.1 million of outstanding letters of credit under the Credit Facility. The interest rate for borrowings outstanding as of September 30, 2023 was 9.8% per annum. As of December 31, 2022, the Company did not have any borrowings outstanding on the Credit Facility and had $38.1 million of outstanding letters of credit under the Credit Facility.

Under the Credit Facility, the Company has an option to request an increase in the ~~number of individuals impacted by these plans. The final identification~~amount of the ~~employees impacted~~Credit Facility or obtain incremental term loans from time to time (on substantially the same terms as apply to the existing facilities) by ~~each program is~~an aggregate amount of up to $175.0 million, so long as, after giving effect to the relevant incremental facility, the pro forma secured net leverage ratio does not exceed 3.50:1.00, provided that the lenders agree to increase their existing commitments or to participate in such incremental term loans. The Company may prepay the Credit Facility in whole or in part, at any time without premium or penalty, subject to ~~customary consultation procedures.~~reimbursement of the lenders’ breakage and redeployment costs in connection with prepayments of Term Benchmark loans or RFR loans, each as defined in the Credit Agreement. The unutilized portion of the commitments under the Credit Facility may be irrevocably reduced or terminated by the Company at any time without penalty.

~~Summary~~Interest on the outstanding principal amount of ~~Severance and Related Charges~~the loans accrues at a per annum rate equal to the Alternate Base Rate, the Adjusted Term SOFR Rate, the Adjusted Daily Simple SOFR Rate, the Adjusted EURIBOR Rate or the Adjusted Daily

January 1,
2017
Costs
Incurred
Cash Payments
Foreign Exchange
Rate Adjustments
September 30, 2017

Ingeus Futures' Program $ 2,486
$ 1,186
$ (3,086 ) $ 158
$ 744
Offender Rehabilitation Program 1,380
(40 ) (1,357 ) 17
—
UK Restructuring Program 50
(29 ) —
3
24
Total $ 3,916
$ 1,117
$ (4,443 ) $ 178
$ 768

January 1,
2016
Costs
Incurred
Cash Payments
Foreign Exchange
Rate Adjustments
September 30, 2016

Offender Rehabilitation Program $ 6,538
$ 4,204
$ (6,075 ) $ (906 ) $ 3,761
UK Restructuring Program 2,059
537
(2,379 ) (103 ) 114
Total $ 8,597
$ 4,741
$ (8,454 ) $ (1,009 ) $ 3,875

Simple SONIA Rate, as applicable and each as defined in the Credit Agreement, in each case, plus an applicable margin. The applicable margin ranges from 1.75% to 3.50% in the case of Term Benchmark loans or RFR loans, each as defined in the Credit Agreement, and 0.75% to 2.50% in the case of the Alternate Base Rate loans, as defined in the Credit Agreement, in each case, based on the Company’s total net leverage ratio as defined in the Credit Agreement. Interest on the loans is payable quarterly in arrears in the case of Alternate Base Rate loans, on the last day of the relevant interest period in the case of Term Benchmark loans, and monthly in arrears in the case of RFR loans. In addition, the Company is obligated to pay a quarterly commitment fee based on a percentage of the unused portion of the revolving credit facility and quarterly letter of credit fees based on a percentage of the maximum amount available to be drawn under each outstanding letter of credit. The commitment fee and letter of credit fee range from 0.30% to 0.50% and 1.75% to 3.50%, respectively, in each case, based on the Company’s total net leverage ratio.

The Credit Agreement contains customary representations and warranties, affirmative and negative covenants and events of default. The negative covenants include restrictions on the Company’s ability to, among other things, incur additional indebtedness, create liens, make investments, give guarantees, pay dividends, sell assets and merge and consolidate. The Company's borrowing capacity under the Credit Facility is currently limited by, among other covenants, compliance with the total ~~of accrued severance and related costs of $768 is reflected in “Accrued expenses”~~net leverage ratio covenant for each fiscal period as amended in the ~~condensed consolidated balance sheet at September 30, 2017.~~ First Amendment to the Credit Agreement.

The Company’s obligations under the Credit Facility are guaranteed by all of the Company’s present and future material domestic subsidiaries, excluding certain material domestic subsidiaries that are excluded from being guarantors pursuant to the terms of the Credit Agreement. The Company’s obligations under, and each guarantor’s obligations under its guaranty of, the Credit Facility are secured by a first priority lien on substantially all of the Company’s or such guarantor’s respective assets. If an event of default occurs, the required lenders may cause the administrative agent to declare all unpaid principal and any accrued and unpaid interest and all fees and expenses under the Credit Facility to be immediately due and payable. All amounts outstanding under the Credit Facility will automatically become due and payable upon the commencement of any bankruptcy, insolvency or similar proceedings. The Credit Agreement also contains a cross default to any of the Company’s indebtedness having a principal amount ~~accrued~~in excess of $40.0 million. The Company was in compliance with all covenants under the Credit Agreement as of September 30, ~~2017 is expected to be settled principally by the end of 2017.~~2023.

~~7. Stockholders’ Equity~~

The following table reflects changes in common stock, additional paid-in capital, retained earnings, accumulated other comprehensive loss, treasury stock and noncontrolling interest for the nine months ended September 30, 2017:

Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Non-controlling Interest Total
Shares Amount Shares Amount
Balance at December 31, 2016 17,315,661
$ 17
$ 302,010
$ 156,718
$ (33,449 ) 3,478,676
$ (125,201 ) $ (2,420 ) $ 297,675
Stock-based compensation —
—
4,636
—
—
—
—
—
4,636
Exercise of employee stock options 70,283
—
1,468
—
—
5,665
(238 ) —
1,230
Restricted stock issued 31,316
—
—
—
—
17,865
(779 ) —
(779 )
Performance restricted stock issued 3,773
—
(96 ) —
—
—
—
—
(96 )
Shares issued for bonus settlement and director stipend 25,225

1,107

—
—
—
—
1,107
Stock repurchase plan —
—
—
—
—
441,965
(17,983 ) —
(17,983 )
Conversion of convertible preferred stock to common stock 415
—
17
—
—
—
—
—
17
Foreign currency translation adjustments, net of tax —
—
—
—
6,591
—
—
(182 ) 6,409
Reclassification of translation loss realized upon sale of equity investment —
—
—
—
527
—
—
—
527
Convertible preferred stock dividends —
—
—
(3,305 ) —
—
—
—
(3,305 )
Noncontrolling interests —
—
—
—
—
—
—
295
295
Other —
—
25
—
—
—
—
—
25
Net income attributable to Providence —
—
—
14,441
—
—
—
—
14,441
Cumulative effect adjustment from change in accounting principle —
—
850
(850 ) ��
—
—
—
—
Balance at September 30, 2017 17,446,673
$ 17
$ 310,017
$ 167,004
$ (26,331 ) 3,944,171
$ (144,201 ) $ (2,307 ) $ 304,199

8.10. Stock-Based Compensation and Similar Arrangements

The Company provides stock-based compensation to employees, ~~and~~ non-employee directors, consultants and advisors under the Company’s 2006 Long-Term Incentive Plan (“2006 Plan”). ~~Typical awards issued under this plan include~~The 2006 Plan allows the flexibility to grant or award stock ~~option awards,~~options, stock appreciation rights, restricted stock, ~~awards (“RSAs”) and performance based~~unrestricted stock, stock units including restricted stock units ~~(“PRSUs”). In addition, the Company has a long-term incentive plan designed to provide long-term~~and performance ~~based~~ awards to ~~certain executive officers of the~~eligible persons.

Stock options. The Company ~~which also falls under the 2006 Plan.~~

~~The following table reflects the amount of~~recognized stock-based compensation expense for ~~share settled awards, recorded in each financial statement line item~~non-qualified stock options (“NQs”) of $0.2 million for the three months ended September 30, 2023, and recognized a reversal of previously recognized stock-based compensation expense for NQs of $0.3 million during the three months ended September 30, 2022 due to forfeitures that occurred during the period. For the nine months ended September 30, ~~2017~~2023 and ~~2016:~~

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Service expense $ 131
$ 100
$ 365
$ 280
General and administrative expense 1,434
1,135
4,221
2,858
Equity in net loss of investees 10
—
50
—
Discontinued operations, net of tax —
22
—
66
Total stock-based compensation $ 1,575
$ 1,257
$ 4,636
$ 3,204

~~Stock-based~~2022, the Company recognized stock-based compensation expense for ~~share settled awards, includes $1,014~~NQs of $0.6 million and ~~$3,098 for the three~~$1.0 million, respectively, in general and nine months ended September 30, 2017, respectively, related to the HoldCo LTIP. Stock-based compensation, for share settled awards, includes $921 and $2,383 for the three and nine months ended September 30, 2016, respectively, related to the HoldCo LTIP. No shares will be distributed under the HoldCo LTIP unless the volume weighted average of Providence’s stock price over a 90-day period ending on December 31, 2017 is greater than $56.79.

administrative expense. At September 30, ~~2017,~~2023, the Company had ~~300,831~~87,388 stock options outstanding with a weighted-average exercise price of ~~$37.97.~~$106.51.

Restricted stock awards and restricted stock units. The Company ~~also~~recognized stock-based compensation expense for restricted stock awards ("RSAs") and restricted stock units ("RSUs") of $1.1 million and $0.7 million for the three months ended September 30, 2023 and 2022, respectively, and $2.9 million and $3.5 million for the nine months ended September 30, 2023 and 2022, respectively, in general and administrative expense. The Company had ~~71,193 shares of~~16,074 unvested RSAs and 285,472 unvested RSUs outstanding at September 30, ~~2017~~2023 with a weighted-average grant date fair value of ~~$44.33~~$80.47 and ~~18,298 unvested PRSUs outstanding.~~$43.86, respectively.

Performance-based share awards. The Company ~~also~~ grants performance-based restricted stock ~~equivalent unit awards (“SEUs”~~units ("PRSUs") to align management’s compensation with the Company's financial performance and ~~stock option equivalent units that~~other operational objectives and to retain key employees. Awards granted under this category are ~~cash settled awards~~based on the achievement of various targeted metrics as approved by the Compensation Committee and ~~are not included as part~~defined in the related PRSU Agreement. Stock-based compensation expense for PRSUs is recognized over the 3-year vesting period under the straight-line attribution method. The Company recorded stock-based compensation expense of ~~the 2006 Plan. During~~$0.4 million for the three months ended September 30, 2023 and recorded a reversal of $0.2 million for the three months ended September 30, 2022 due to forfeitures that occurred during the period. For the nine months ended September 30, ~~2017, respectively,~~2023 and 2022, the Company ~~recorded $380 and $1,611 of~~recognized stock-based compensation expense for ~~cash settled awards. During the three~~PRSUs of $0.5 million and ~~nine months ended September 30, 2016,~~$0.6 million, respectively, ~~the Company recorded $422 and $305 of stock-based compensation expense for cash settled awards. The expense and benefit for cash settled awards is included as “General~~in general and administrative ~~expense” in the accompanying condensed consolidated statements of income. As the awards are cash settled, a significant amount of the~~expense. The remaining expense ~~recorded for the three and nine months ended September 30, 2017 and 2016~~ is attributable to the Company’s increase or decrease in stock price from the previous reporting period. The liability for unexercised cash settled share-based payment awards of $3,168 and $1,764 at September 30, 2017 and December 31, 2016, respectively, are reflected in “Accrued expenses” in the condensed consolidated balance sheets. At September 30, 2017, the Company had 6,671 SEUs and 200,000 stock option equivalent units outstanding.

The Company also provides cash settled long-term incentive plans for executive management and key employees of its operating segments. During the three months ended June 30, 2017, the Company revised the structure of the NET Services long-term incentive plan. As a result, the Company finalized the amount payable under the plan at $2,956. The total value will be paid to the awarded participants per the terms of the original agreement and thus the remaining unamortized expense relating to this plan continuesexpected to be recognized over the ~~remaining~~remainder of the 3-year requisite service period. ~~As of~~The Company had 213,428 unvested PRSUs outstanding at September 30, ~~2017, unamortized~~2023 with a weighted-average grant date fair value of $43.74

Employee Stock Purchase Plan

During the fourth quarter of 2022, the Company began offering an Employee Stock Purchase Plan ("ESPP") with 1,000,000 shares of Common Stock reserved for purchase pursuant to the Plan for eligible employees. The shares of Common Stock may be newly issued shares, treasury shares or shares acquired on the open market. Under the terms of the ESPP, eligible employees may designate a dollar value or percentage of their compensation ~~expense is $696.~~to be withheld through payroll deductions, up to a maximum of $25,000 in each plan year, for the purchase of common stock at a discounted rate of 85% of the lower of the market price on the first or last trading day of the offering period. For the three and nine months ended September 30, ~~2017, expenses~~2023, Company recorded an immaterial amount of ~~$274 and $419, respectively, are included as “Service expense” in the condensed consolidated statements~~stock-based compensation expense. As of ~~income related to these plans. For the three and nine months ended~~ September 30, ~~2016, $1,157 and $3,151, respectively, of expense are included as “Service expense” in~~2023, 989,186 shares remain available for future issuance under the condensed consolidated statements of income related to these plans. At September 30, 2017, the liability for long-term incentive plans of the Company’s operating segments of $2,260 is reflected in “Accrued expenses” and “Other long-term liabilities” in the condensed consolidated balance sheet. At December 31, 2016, the liability for long-term incentive plans of the Company’s operating segments of $1,841 is reflected in “Other long-term liabilities” in the condensed consolidated balance sheet.ESPP.

~~9. Earnings~~11. Loss Per Share

The following table details the computation of basic and diluted ~~earnings~~loss per ~~share:~~ share (in thousands, except share and per share data):


	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Numerator:
Net loss	$	(4,302)	$	(28,505)	$	(199,208)	$	(24,859)

Denominator:
Denominator for basic earnings per share -- weighted-average shares	14,182,839		14,051,794		14,169,537		14,041,224
Effect of dilutive securities:
Common stock options	—		—		—		—
Restricted stock	—		—		—		—
Denominator for diluted earnings per share -- adjusted weighted-average shares assumed conversion	14,182,839		14,051,794		14,169,537		14,041,224

Loss per share:
Basic loss per share	$	(0.30)	$	(2.03)	$	(14.06)	$	(1.77)
Diluted loss per share	$	(0.30)	$	(2.03)	$	(14.06)	$	(1.77)

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Numerator:
Net income attributable to Providence $ 14,853
$ 650
$ 14,441
$ 7,508
Less dividends on convertible preferred stock (1,114 ) (1,111 ) (3,305 ) (3,309 )
Less income allocated to participating securities (1,777 ) (284 ) (2,209 ) (502 )
Net income (loss) available to common stockholders $ 11,962
$ (745 ) $ 8,927
$ 3,697

Continuing operations $ 11,978
$ 2,046
$ 14,927
$ 3,405
Discontinued operations (16 ) (2,791 ) (6,000 ) 292
$ 11,962
$ (745 ) $ 8,927
$ 3,697

Denominator:
Denominator for basic earnings per share -- weighted-average shares 13,581,662
14,523,408
13,612,764
14,823,757
Effect of dilutive securities:
Common stock options 68,856
111,075
58,668
119,267
Performance-based restricted stock units 5,036
—
5,036

Denominator for diluted earnings per share -- adjusted weighted-average shares assumed conversion 13,655,554
14,634,483
13,676,468
14,943,024

Basic earnings (loss) per share:
Continuing operations $ 0.88
$ 0.14
$ 1.10
$ 0.23
Discontinued operations —
(0.19 ) (0.44 ) 0.02
$ 0.88
$ (0.05 ) $ 0.66
$ 0.25
Diluted earnings (loss) per share:
Continuing operations $ 0.88
$ 0.14
$ 1.09
$ 0.23
Discontinued operations —
(0.19 ) (0.44 ) 0.02
$ 0.88
$ (0.05 ) $ 0.65
$ 0.25

Income allocated to participating securities is calculated by allocating a portion of net income attributable to Providence, less dividends on convertible stock, to the convertible preferred stockholders on a pro-rata as converted basis; however, the convertible preferred stockholders are not allocated losses.

The following ~~weighted average~~weighted-average shares were not included in the computation of diluted earnings per share as the effect of their inclusion would have been anti-dilutive:


	Three months ended September 30,		Nine months ended September 30,
	2023	2022	2023	2022
Stock options to purchase common stock	90,579	115,686	96,725	123,534
Restricted stock awards and restricted stock units	141,712	80,332	97,719	82,944

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Stock options to purchase common stock 33,890
33,957
56,528
33,957
Convertible preferred stock 803,285
803,398
803,360
803,457

~~10.~~12. Income Taxes

The Company’s effective tax rate ~~from continuing operations~~ for the three months ended September 30, 2023 and 2022 was a tax benefit of 28.6% and 33.9%, respectively, and for the nine months ended September 30, ~~2017~~2023 and 2022 was ~~16.7%~~a tax benefit of 2.1% and ~~28.8%~~a tax provision of 21.7%, respectively. ~~The Company’s effective tax rate from continuing operations for~~

For the three ~~and nine~~ months ended September 30, ~~2016 was 55.6%~~2023 and ~~64.9%, respectively. The~~2022, the effective tax rates for the ~~three and nine months ended September 30, 2016 exceeded~~benefits were significantly higher than the U.S. federal statutory rate of ~~35%~~21.0% primarily due to foreign net operating losses (including equity investment losses in certain of the periods) for which the future income tax benefit currently cannot be recognized, losses in foreign jurisdictions with tax rates lower than the U.S. rate of 35%, state income taxes and ~~certain non-deductible~~nondeductible expenses. ~~Foreign net operating losses for which no tax benefit can be provided were higher in 2016 versus 2017 resulting in a decrease in~~For the ~~effective tax rate from 2016 to 2017. Additionally, for the three and~~ nine months ended September 30, ~~2017, there~~2023, the effective tax rate for the benefit was ~~no provision for income taxes related to~~significantly lower than the ~~gain on sale~~U.S. federal statutory rate of ~~equity investment of $12,606~~21.0% primarily due to the ~~substantial difference in tax basis versus book basis in~~nondeductible goodwill impairment. For the ~~investment.~~

~~The Company recorded excess tax deficiencies for the three and~~ nine months ended September 30, ~~2017 of $261 and $148, respectively, which increased~~

2022, the effective tax rate for the provision ~~for income taxes. These excess tax deficiencies were a result of applying the guidance in ASU 2016-09 as further discussed in Note 2,~~ ~~Significant Accounting Policies and Recent Accounting Pronouncements.~~

The adoption of ASU 2016-09 subjects our tax rate to quarterly volatility from the effects of stock award exercises and vesting activities, including the adverse impact on our income tax provision for awards which result in a tax deduction lesswas higher than the ~~amount recorded for financial reporting purposes based upon the fair value~~U.S. federal statutory rate of the award at the grant date. For example, no shares will be distributed under the HoldCo LTIP unless the volume weighted average of Providence’s stock price over a 90-day period ending on December 31, 2017 exceeds $56.79. If this market condition is not satisfied, a significant tax shortfall will result, causing an adverse impact on our tax provision.21.0% primarily due to state income taxes and nondeductible expenses.

~~11.~~13. Commitments and Contingencies

~~Legal proceedings~~Surveys, audits and governmental investigations

On September 28, 2017, the Court approved a proposed settlement agreement among the parties that provides for a settlement amount of $10,000 less plaintiff’s legal fees and expenses (the “Settlement Amount”), with 75% of the Settlement Amount to be paid to the Company and 25% of the Settlement Amount to be paid to holders of the Company’s common stock other than certain excluded parties. The Company expects to receive a payment of approximately $5,000. As this amount is considered a gain contingency, the Company has not recorded a receivable for this amount as of September 30, 2017.

~~For further information regarding this legal proceeding please see Note 19,~~ ~~Commitments and Contingencies, in the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and Note 11,~~ ~~Commitments and Contingencies, in the unaudited condensed consolidated financial statements included in the Company’s Quarterly Reports on Form 10-Q for the periods ended March 31, 2017 and June 30, 2017.~~

In ~~addition to the matter described above, in~~ the ordinary course of business, the Company ~~is a party~~may from time to time be or become subject to surveys, audits and governmental investigations under or with respect to various ~~lawsuits.~~governmental programs and state and federal laws. Agencies associated with the programs and other third-party commercial payors periodically conduct extensive pre-payment or post-payment medical reviews or other audits of claims data to identify possiblepayments made or authorized other than in compliance with the requirements of Medicare or Medicaid. In order to conduct these reviews, documentation is requested from us and then that documentation is reviewed to determine compliance with applicable rules and regulations, including the eligibility of clients to receive benefits, the appropriateness of the care provided to those clients, and the documentation of that care. Similarly, other state and federal governmental agencies conduct reviews and investigations to confirm our compliance with applicable laws where we operate, including regarding employment and wage related regulations and matters. We cannot predict the ultimate outcome of any regulatory reviews or other governmental surveys, audits or investigations, but management does not expect any ongoing surveys, audits or investigations involving the Company to have a material adverse effect on the business, liquidity, financial condition, or results of operations of the Company.Regardless of our expectations, however, surveys, audits or investigations are subject to inherent uncertainties and can have a material adverse impact on our Company due to, among other reasons, potential regulatory orders that inhibit our ability to operate our business, amounts paid as reimbursement or in settlement of any such matter, diversion of management resources and investigative costs.

In the ordinary course of business, the Company may from time to time be or become involved in various lawsuits, some of which may seek monetary damages, including claims for punitive damages. Management does not expect ~~these~~any ongoing lawsuits involving the Company to have a material impact on the business, liquidity, financial condition, or results of operations of the Company. Legal proceedings are subject to inherent uncertainties, however, and unfavorable rulings or other events could occur. Unfavorable resolutions could involve substantial monetary damages. In addition, in matters for which conduct remedies are sought, unfavorable resolutions could include an injunction or other order precluding particular business practices or requiring other remedies. An unfavorable outcome might result in a material adverse impact on our business, liquidity, financial ~~condition~~position, or results of ~~Providence.~~operations.

~~Indemnifications related to Haverhill Litigation~~

The Company ~~completed~~records accruals for loss contingencies related to legal matters when it is probable that a ~~rights offering on February 5, 2015 (the “Rights Offering”) providing all~~liability will be incurred and the amount of the ~~Company’s existing common stockholders~~loss can be reasonably estimated. If the ~~non-transferable right to purchase their pro rata share~~Company determines that a range of ~~$65,500 of convertible preferred stock at a price equal to $100.00 per share (“Preferred Stock”). Stockholders exercised subscription rights to purchase 130,884 shares of~~reasonably possible losses can be estimated, the ~~Company's Preferred Stock. Pursuant~~Company records an accrual for the most probable amount in the range. Due to the ~~terms~~inherent difficulty in predicting the outcome of any legal proceeding, it may not be reasonably possible to estimate a range of potential liability until the matter is close to resolution. Legal fees related to all legal matters are expensed as incurred.

On September 27, 2022, Daniel Greenleaf, the Company’s former Chief Executive Officer, asserted claims in an arbitration against the Company. His claims allege that the Company breached Mr. Greenleaf’s employment agreement and ~~conditions of~~included a tort claim against the ~~Standby Purchase Agreement (the “Standby Purchase Agreement”) between Coliseum Capital Partners, L.P., Coliseum Capital Partners II, L.P., Coliseum Capital Co-Invest, L.P.~~Company. Mr. Greenleaf’s arbitration complaint sought contractual, extra-contractual, and ~~Blackwell Partners, LLC (collectively, the “Standby Purchasers”)~~statutory damages. In May 2023, Mr. Greenleaf and the Company the remaining 524,116 shares of the Company’s Preferred Stock were purchased by the Standby Purchasers at the $100.00 per share subscription price. The Company has indemnified the Standby Purchasers from and against any and all losses, claims, damages, expenses and liabilities relating to or arising out of (i) any breach of any representation, warranty, covenant or undertaking made by or on behalf of the Company in the Standby Purchase Agreement and (ii) the transactions contemplated by the Standby Purchase Agreement and the 14.0% Unsecured Subordinated Note in aggregate principal amount of $65,500, except to the extent that any such losses, claims, damages, expenses and liabilities are attributable to the gross negligence, willful misconduct or fraud of such Standby Purchaser.

The Company has also indemnified other third parties from and against any and all losses, claims, damages, expenses and liabilities arising out of or in connection with the Company’s acquisition of CCHN Group Holdings, Inc. (operating under the tradename Matrix, and formerly included in our HA Services segment) in October 2014 and related financing commitments, except to the extent that any such losses, claims, damages, expenses and liabilities are found inexecuted a final, non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence, bad faith or willful misconduct of such third parties, or a material breach of such third parties’ obligations under the related agreements.

~~The Company recorded $21 and $296 of such indemnified legal expenses~~settlement agreement related to ~~the Haverhill Litigation during the three~~both sides' claims in arbitration and ~~nine months ended September 30, 2017, respectively, and $791 and $935~~a general release of such indemnified legal expenses during the three and nine months ended September 30, 2016, respectively, which is included in “General and administrative expenses” in the condensed consolidated statements of income. Of these amounts, $23 and $231 for the three and nine months ended September 30, 2017, respectively, and $360 and $504 for the three and nine months ended September 30, 2016, respectively, were indemnified legal expenses of related parties. Other legal expenses of the Company related to the Haverhill Litigation are covered under the Company’s insurance policies, subject to applicable deductibles and customary review of the expenses by the carrier. The Company recognized related benefit of $3 and expense of $8 for the three and nine months ended September 30, 2017, respectively, and related expense of $107 for the three and nine months ended September 30, 2016. While the carrier typically remits payment directly to the respective law firm, the Company accrues for the cost and records a corresponding receivable for the amount to be paid by the carrier. The Company has recognized an insurance receivable of $903 and $1,645 in “Other receivables” in the condensed consolidated balance sheets at September 30, 2017 and December 31, 2016, respectively, with a corresponding liability amount recorded to “Accrued expenses”.

~~Other Indemnifications~~

The Company has provided certain standard indemnifications in connection with the sale of the Human Services segment to Molina Healthcare Inc. (“Molina”) effective November 1, 2015. All representations and warranties made by the Company in the Membership Interest Purchase Agreement (the “Purchase Agreement”) to sell the Human Services segment ended on February 1, 2017. However,all claims made prior to February 1, 2017 by the purchaser of the Human Services segment against these representations and warranties may survive until the claims are settled. In addition, certain representations, including tax representations, survive until the expiration of applicable statutes of limitation, and healthcare representations survive until the third anniversary of the closing date. The Company received indications from the purchaser of the Human Services segment prior to the February 1, 2017 deadline regarding potential indemnification claims. One such potential indemnification claim relates to ~~Rodriguez v. Providence Community Corrections~~ ~~(the “Rodriguez Litigation”)~~, a complaint filed in the District Court for the Middle District of Tennessee, Nashville Division (the “Rodriguez Court”), against Providence Community Corrections, Inc. (“PCC”), an entity sold under the Purchase Agreement. In September 2017, the parties to the Rodriguez Litigation submitted a proposed settlement to the Rodriguez Court for approval pursuant to which PCC would pay the plaintiffs approximately $14,000. In October 2017, the Rodriguez Court denied preliminary approval of the settlement agreement and requested that the parties provide additional information. In October 2017, the parties submitted an amended motion for the Rodriguez Court to approve the proposed settlement.

~~Molina~~ and the Company ~~have entered into~~agreed to pay Mr. Greenleaf $9.6 million. The Company paid the settlement amount in full in May of 2023.

On August 6, 2020, the Company’s subsidiary, ModivCare Solutions, LLC (“ModivCare Solutions”), was served with a ~~memorandum~~putative class action lawsuit filed against it by Mohamed Farah, the owner of ~~understanding regarding a settlement~~transportation provider Dalmar Transportation, in the Western District of Missouri, seeking to represent all non-employee transportation providers contracted with ModivCare Solutions. The lawsuit alleges claims under the Fair Labor Standards Act of 1938, as amended (the “FLSA”), and the Missouri Minimum Wage Act, and asserts that all transportation providers to ModivCare Solutions in the putative class should be considered ModivCare Solutions’ employees rather than independent contractors. On June 6, 2021, the Court conditionally certified as the putative class all current and former In Network Transportation Providers who, individually or through their companies, were issued 1099 payments from ModivCare Solutions for providing non-emergency medical transportation services for ModivCare Solutions for the previous three years. Notice of the proposed collective class was issued on October 5, 2021, and potential members of the class had until January 3, 2022 to opt-in. Plaintiff moved for class certification on August 15, 2022, and ModivCare Solutions filed an ~~indemnification claim by Molina~~opposition to class certification on September 6, 2022. On January 13, 2023, the matter was transferred with ~~respect~~the consent of the parties and the court to ~~the Rodriguez Litigation and other matters.~~binding arbitration. As of September 30, 2023, the parties have agreed on a settlement and are awaiting the arbitrator's approval. ModivCare Solutions believes that it is and has been in compliance in all material respects with the laws and regulations regarding the characterization of the transportation providers

as independent contractors, and does not believe that the settlement arrangement, if approved by the arbitrator, or the ultimate outcome of this arbitration, if the settlement is not approved (which is not expected), will have a material adverse effect on the Company’s business, liquidity, financial condition or results of operations.

In 2017, one of our PCS segment subsidiaries, All Metro Home Care Services of New York, Inc. d/b/a All Metro Health Care (“All Metro”), received a class action lawsuit in state court claiming that, among other things, it failed to properly pay live-in caregivers who stay in patients’ homes for 24 hours per day (“live-ins”). The Company currently pays live-ins for 13 hours per day as supported through a written opinion letter from the ~~accrual~~New York State Department of Labor (“NYSDOL”). A similar case involving this issue has been heard by the New York Court of Appeals (New York’s highest court), which on March 26, 2019, issued a ruling reversing earlier lower courts’ decisions that an employer must pay live-ins for 24 hours. The Court of Appeals agreed with the NYSDOL’s interpretation to pay live-ins 13 hours instead of 24 hours if certain conditions were being met. If the class action lawsuit on this matter is ~~$15,000~~allowed to proceed, and is successful, All Metro may be liable for back wages and liquidated damages going back to November 2011. All Metro filed its motion to oppose class certification of this matter and the matter was heard on June 23, 2022. The state court issued an order certifying the class on December 12, 2022. The parties attempted to mediate their dispute in June 2023, but were unable to reach agreement on a settlement. All Metro intends to defend itself vigorously with respect to ~~an estimate of loss for potential indemnification claims. The Company expects to recover a substantial portion of the settlement through insurance coverage, although~~ this ~~cannot be assured.~~

~~The Company~~matter, believes that it is and has ~~provided certain standard indemnifications~~been in connection with its Matrix stock subscription transaction whereby Mercury Fortuna Buyer, LLC (“Subscriber”), Providence and Matrix entered into a stock subscription agreement (the “Subscription Agreement”), dated August 28, 2016. The representations and warranties made by the Companycompliance in the Subscription Agreement survive through the 15th month following the closing date; however, certain fundamental representations survive through the 36th month following the closing date. The covenants and agreements of the parties to be performed prior to the closing survive through the 15th month following the closing date, and all ~~other covenants and agreements survive until the expiration of the applicable statute of limitations in the event of a breach, or for such lesser periods specified therein.~~ ~~The Company is not aware of any indemnification liabilities with respect to Matrix that require accrual at September 30, 2017.~~

~~Other Contingencies~~

On October 26, 2017, the UK Ministry of Justice (the “MOJ”) released a report on reoffending statistics for certain offenders who entered probation services during the period October 2015 to December 2015. The report provides statistics for all providers of probation services, including the Company’s subsidiary Reducing Reoffending Partnership (“RRP”). This information is the first data set that is utilized to determine performance payments under the various providers’ transforming rehabilitation contractsmaterial respects with the ~~MOJ, as~~laws and regulations covering pay for live-in caregivers, and does not believe in any event that the ~~actual rates~~ultimate outcome of recidivism are compared to benchmark rates established by the MOJ. Across the industry, including for RRP, while certain rates of recidivism were less than the applicable benchmarks, other rates exceeded the benchmarks established by the MOJ. If such rates of recidivism were to continue to exceed the benchmark rates established by the MOJ, RRP could be required to make payments to the MOJ, which amounts could be material. The amount of potential payments to the MOJ, if any, under RRP’s contracts with the MOJ is not estimable at this ~~time, as the MOJ is reviewing the data to understand the underlying reasons for the increase in certain rates of recidivism and other factors that could impact the contractual measure.~~

~~Loss Reserves for Certain Reinsurance Programs~~

~~The Company historically reinsured~~matter will have a substantial portion of its automobile, general and professional liability and workers’ compensation costs under reinsurance programs through the Company’s wholly-owned subsidiary, Social Services Providers Captive Insurance Company (“SPCIC”), a licensed captive insurance company domiciled in the State of Arizona. As of May 16, 2017, SPCIC did not renew the expiring reinsurance policies. SPCIC will continue to resolve claims under the historical policy years.

The Company utilizes a report prepared by an independent actuary to estimate the gross expected losses related to historical automobile, general and professional and workers’ compensation liability reinsurance policies, including the estimated losses in excess of SPCIC’s insurance limits, which would be reimbursed to SPCIC to the extent such losses were incurred. As of September 30, 2017 and December 31, 2016, the Company had reserves of $8,309 and $11,195, respectively, for the automobile, general and professional liability and workers’ compensation reinsurance policies, net of expected receivables for losses in excess of SPCIC’s historical insurance limits. The gross reserve as of September 30, 2017 and December 31, 2016 of $14,407 and $16,460, respectively, is classified as “Reinsurance liability reserves” and “Other long-term liabilities” in the condensed consolidated balance sheets. The estimated amount to be reimbursed to SPCIC as of September 30, 2017 and December 31, 2016 was $6,098 and $5,265, respectively, and is classified as “Other receivables" and “Other assets” in the condensed consolidated balance sheets.

~~Deferred Compensation Plan~~

The Company has one deferred compensation plan for highly compensated employees of NET Services as of September 30, 2017. The deferred compensation plan is unfunded, and benefits are paid from the general assets of the Company. The total of participant deferrals, which is reflected in “Other long-term liabilities” in the condensed consolidated balance sheets, was $1,718 and $1,430 at September 30, 2017 and December 31, 2016, respectively.

~~12. Transactions with Related Parties~~

~~The Company incurred legal expenses under an indemnification agreement with the Standby Purchasers as further discussed in Note 11,~~ ~~Commitments and Contingencies~~. Convertible preferred stock dividends earned by the Standby Purchasers during the three and nine months ended September 30, 2017 totaled $1,062 and $3,151, respectively. Convertible preferred stock dividends earned by the Standby Purchasers during the three and nine months ended September 30, 2016 totaled $1,059 and $3,154, respectively.

~~During the three months ended March 31, 2017, the Company made a $566 loan to Mission Providence. The loan was repaid during the three months ended September 30, 2017.~~

~~13. Discontinued Operations~~

On November 1, 2015, the Company completed the sale of the Human Services segment. During the three and nine months ended September 30, 2017, the Company recorded additional expenses related to the Human Services segment, principally related to legal proceedings as described in Note 11, ~~Commitments and Contingencies, related to an indemnified legal matter.~~

Effective October 19, 2016, the Company completed the Matrix Transaction. Prior to the closing of the Matrix Transaction, the financial results of Matrix were included in the Company’s HA Services segment, which has been reflected as a discontinued operation for the three and nine months ended September 30, 2016. Following the Matrix Transaction, the Company has a continuing involvement with Matrix through its ownership interest in Matrix, which is accounted for as an equity method investment. As of September 30, 2017, the Company holds a 46.6% ownership interest in Matrix. Matrix’s pretax loss for the three and nine months ended September 30, 2017 totaled $582 and $896, respectively. There have been no cash inflows or outflows from or to Matrix subsequent to the closing of the Matrix Transaction, other than the payment of working capital adjustments and management fees associated with its ongoing relationship with Matrix, of which $841 was received during the nine months ended September 30, 2017. $259 and $185 are included in “Other receivables” in the condensed consolidated balance sheets at September 30, 2017 and December 31, 2016, respectively, related to management fees receivable.

~~Results of Operations~~

~~The following tables summarize the results of operations classified as discontinued operations, net of tax, for the three and nine months ended September 30, 2017 and 2016.~~

General and administrative expenses for the three months ended September 30, 2017 includes legal expenses of $26. General and administrative expenses for the nine months ended September 30, 2017 includes an accrual of $9,000 for an estimated settlement of indemnified claims related to the sale of the Human Services segment, as well as related legal expenses of $622. See Note 11, ~~Commitments and Contingencies, for additional information.~~

Three months ended September 30, 2016 Nine months ended September 30, 2016

Human
Services
Segment

HA Services
Segment

Total
Discontinued
Operations

Human
Services
Segment

HA Services
Segment

Total
Discontinued
Operations

Service revenue, net $ —
$ 52,557
$ 52,557
$ —
$ 155,421
$ 155,421

Operating expenses:
Service expense —
38,703
38,703
—
113,455
113,455
General and administrative expense 7,463
1,505
8,968
7,463
2,823
10,286
Depreciation and amortization —
5,359
5,359
—
21,121
21,121
Total operating expenses 7,463
45,567
53,030
7,463
137,399
144,862
Operating income (loss) (7,463 ) 6,990
(473 ) (7,463 ) 18,022
10,559

Other expenses:
Interest expense, net —
3,134
3,134
—
9,304
9,304
Income (loss) from discontinued operations before income taxes (7,463 ) 3,856
(3,607 ) (7,463 ) 8,718
1,255
Income tax benefit (provision) 2,428
(1,612 ) 816
2,428
(3,351 ) (923 )
Discontinued operations, net of tax $ (5,035 ) $ 2,244
$ (2,791 ) $ (5,035 ) $ 5,367
$ 332

~~Interest expense, net~~

~~The Company allocated interest expense, including amortization of deferred financing fees, to discontinued operations based~~material adverse effect on the portion of debt that was required to be repaid with the proceeds from the Matrix Transaction. The total allocated interest expense was $3,136 and $9,310 for the three and nine months ended September 30, 2016 respectively, and is included in “Interest expense, net” in the table above.

~~Cash Flow Information~~

~~The following table presents depreciation, amortization and capital expenditures of the discontinued operations for the nine months ended September 30, 2016:~~

Providence, through its subsidiaries and other companies in which it holds interests, is primarily engaged in the provision of healthcare and workforce development services. The subsidiaries and other companies in which the Company holds interests comprise the following segments:

Effective October 19, 2016, pursuant to the Matrix Transaction, the Company no longer owns a controlling interest in Matrix, which historically constituted the HA Services segment as further discussed in Note 13, ~~Discontinued Operations~~. As the HA Services segment, through October 19, 2016, is presented as a discontinued operation, it is not reflected in the Company’s segment disclosures. However, the Company accounts for its noncontrolling interest in Matrix from October 19, 2016 through present as an equity method investment, which solely comprises the Matrix Investment in the table below.

~~The following tables set forth certain financial information from continuing operations attributable to~~ the Company’s business, ~~segments for the three and nine months ended September 30, 2017 and 2016:~~liquidity, financial condition or results of operations.

Three months ended September 30, 2017
NET Services WD Services
Matrix
Investment

Corporate and
Other
Total
Service revenue, net $ 324,824
$ 84,693
$ —
$ —
$ 409,517
Service expense 304,454
73,581
—
(3 ) 378,032
General and administrative expense 2,899
6,980
—
8,750
18,629
Depreciation and amortization 3,286
3,166
—
95
6,547
Operating income (loss) $ 14,185
$ 966
$ —
$ (8,842 ) $ 6,309

Equity in net gain (loss) of investee $ —
$ (459 ) $ (1 ) $ —
$ (460 )

Three months ended September 30, 2016
NET Services WD Services
Matrix
Investment

Corporate and
Other
Total
Service revenue, net $ 317,280
$ 94,960
$ —
$ 31
$ 412,271
Service expense 293,919
84,051
—
518
378,488
General and administrative expense 2,860
6,780
—
7,680
17,320
Depreciation and amortization 3,051
3,497
—
122
6,670
Operating income (loss) $ 17,450
$ 632
$ —
$ (8,289 ) $ 9,793

Equity in net gain (loss) of investee $ —
$ (1,517 ) $ —
$ —
$ (1,517 )

Nine months ended September 30, 2017
NET Services WD Services
Matrix
Investment

Corporate and
Other
Total
Service revenue, net $ 987,662
$ 229,332
$ —
$ —
$ 1,216,994
Service expense 927,082
199,665
—
(2,269 ) 1,124,478
General and administrative expense 8,879
20,944
—
23,882
53,705
Depreciation and amortization 9,763
9,695
—
258
19,716
Operating income (loss) $ 41,938
$ (972 ) $ —
$ (21,871 ) $ 19,095

Equity in net gain (loss) of investee $ —
$ (1,419 ) $ 428
$ —
$ (991 )

Nine months ended September 30, 2016
NET Services WD Services
Matrix
Investment

Corporate and
Other
Total
Service revenue, net $ 917,157
$ 275,293
$ —
$ (24 ) $ 1,192,426
Service expense 846,311
247,797
—
903
1,095,011
General and administrative expense 8,483
23,236
—
20,829
52,548
Depreciation and amortization 8,858
10,912
—
288
20,058
Operating income (loss) $ 53,505
$ (6,652 ) $ —
$ (22,044 ) $ 24,809

Equity in net gain (loss) of investee $ —
$ (5,693 ) $ —
$ —
$ (5,693 )

~~Geographic Information~~

Domestic service revenue, net, totaled 82.1% and 78.0% of service revenue, net for the nine months ended September 30, 2017 and 2016, respectively. Foreign service revenue, net, totaled 17.9% and 22.0% of service revenue, net for the nine months ended September 30, 2017 and 2016, respectively.

At September 30, 2017 and December 31, 2016, $99,352, or 26.0%, and $76,579, or 20.4%, respectively, of the Company’s net assets were located in countries outside of the U.S., including $15,823 of proceeds realized on the sale of the equity investment in Mission Providence.

~~15. Subsequent Events~~

On November 2, 2017, the Company’s Board of Directors approved the extension of the Company’s existing stock repurchase program, authorizing the Company to engage in a common stock repurchase program to repurchase up to $69,624 (the amount remaining from the $100,000 repurchase amount authorized in 2016) in aggregate value of the Company’s common stock through December 31, 2018. Purchases under the common stock repurchase program may be made from time-to-time through a combination of open market repurchases (including Rule 10b5-1 plans), privately negotiated transactions, and accelerated share repurchase transactions, at the discretion of the Company’s officers, and as permitted by securities laws, covenants under existing bank agreements, and other legal requirements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and accompanying notes for the three and nine months ended September 30, ~~2017~~2023 and ~~2016,~~2022 included herein, as well as our audited consolidated financial statements and accompanying notes and management’s discussion and analysis of financial condition and results of operations included in our Form 10-K for the year ended December 31, ~~2016.~~2022. For purposes of “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” references to ~~Q3 2017~~"Q3 2023" and ~~Q3 2016~~"Q3 2022" mean the three months ended September 30, ~~2017~~2023 and the three months ended September 30, ~~2016, respectively,~~2022, respectively.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and ~~references~~Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 3b-6 promulgated thereunder, including statements related to ~~YTD 2017~~the Company’s strategies or expectations about revenues, liabilities, results of operations, cash flows, ability to fund operations, profitability, ability to meet financial covenants, contracts or market opportunities. These statements are predictive in nature and ~~YTD 2016 mean~~are frequently identified by the ~~nine months~~use of terms such as “may,” “will,” “should,” “expect,” “believe,” “estimate,” “intend,” and similar words indicating possible future expectations, events or actions. In addition, statements that are not historical statements of fact should also be considered forward-looking statements. Such forward-looking statements are based on current expectations, assumptions, estimates and projections about our business and our industry, and are not guarantees of our future performance. These statements are subject to a number of known and unknown risks, uncertainties and other factors, many of which are beyond our ability to control or predict, that may cause actual events to be materially different from those expressed or implied herein. Among such risks, uncertainties and other factors are those summarized under the caption “Summary Risk Factors” in Part I, and described in further detail under the caption “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, for the fiscal year ended ~~September 30, 2017~~December 31, 2022. Hyperlinks to such sections of our Annual Report are contained in the text included within the quotation marks.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made and are expressly qualified in their entirety by the ~~nine months ended September 30, 2016, respectively.~~cautionary statements set forth herein and in our other filings with the SEC, which you should read in their entirety before making an investment decision with respect to our securities. We undertake no obligation to update or revise any forward-looking statements contained in this release, whether as a result of new information, future events or otherwise, except as required by applicable law.

Overview of ~~our business~~Our Business

~~Providence, through its subsidiaries~~ModivCare Inc. ("ModivCare" or the "Company") is a technology-enabled healthcare services company that provides a suite of integrated supportive care solutions for public and ~~other companies in which it holds interests,~~private payors and their members. Its value-based solutions address the social determinants of health ("SDoH") by connecting members to essential care services. By doing so, ModivCare helps health plans manage risks, reduce costs, and improve overall health outcomes. ModivCare is ~~primarily engaged in the provision of healthcare and workforce development services. The subsidiaries and other companies in which we hold interests comprise the following segments:~~

~~Non-Emergency Transportation Services (“NET Services”) – Nationwide~~a provider of non-emergency medical transportation ~~programs for state governments~~("NEMT"), personal care services ("PCS"), and ~~managed~~remote patient monitoring ("RPM") solutions, which serve similar, highly vulnerable patient populations. The technology-enabled operating model in its NEMT segment includes the coordination of non-emergency medical transportation services supported by an infrastructure of core competencies in risk underwriting, contact center management, network credentialing and claims management. Additionally, its personal care ~~organizations.~~services include placements of non-medical personal care assistants, home health aides and nurses primarily to Medicaid patient populations in need of care monitoring and assistance performing daily living activities in the home setting. ModivCare’s remote patient monitoring services include personal emergency response systems, vitals monitoring and data-driven patient engagement solutions.

Business Outlook and Trends

Our performance is affected by a number of trends that drive the demand for our services. In particular, the markets in which we operate are exposed to various trends, such as healthcare industry and demographic ~~dynamics in the United States (“U.S.”) and international government outsourcing and employment~~ dynamics. Over the long term, we believe there are numerous factors that could affect growth within the industries in which we operate, including:

•an aging population, which ~~will~~is expected to increase demand for healthcare services including required transportation to such healthcare services and in-home personal care and remote patient monitoring services;

•increasing prevalence of chronic illnesses that require active and ongoing monitoring of health data which can be accomplished at a lower cost and result in better health outcomes through remote patient monitoring services;

•a movement towards value-based care versus ~~fee for service,~~fee-for-service and cost plus care and budget pressure on governments, both of which may increase the use of private corporations to provide necessary and innovative services;

•increasing demand for in-home care provision, driven by cost pressures on traditional reimbursement models and technological advances enabling remote ~~engagement;~~engagement, including remote monitoring and similar internet-based health related services;

•a shift in membership dynamics as a result of Medicaid redetermination efforts, which may decrease membership levels at our NEMT segment;

•advancement of regulatory priorities, which include the Centers for Medicare and Medicaid Services ("CMS") proposed rule, Ensuring Access to Medicaid Services, which may lower profit margins at our PCS segment;

•technological advancements, which may be utilized by us to improve ~~service~~services and lower costs, ~~and~~but may also be utilized by others, which may increase industry competitiveness;

•MCO, Medicaid and Medicare plans increasing coverage of non-emergency medical transportation services for a variety of reasons, including increased access to care, improved patient compliance with treatment plans, social trends, and to promote SDoH, and this trend may be accelerated or reinforced by The Consolidated Appropriations Act of 2021 ("H.R.133"), a component of which mandates that state Medicaid programs ensure that Medicaid beneficiaries have necessary transportation to and from health care providers; and

•uncertain macroeconomic conditions, including rising interest rates, could have an effect on our debt and short-term borrowings, which may have a negative impact on our results.

On May 11, 2023, the Department of Health and Human Services ("HHS") declared the end of the public health emergency ("PHE") for the COVID-19 pandemic. While the Company has continued to experience increased trip volume, service hours, and patient visits each year following the pandemic, structural changes in ~~UK government policy, such~~the industry as ~~decreased volumes in future welfare-to-work programs, specifically through the UK’s Work and Health Programme, which will have~~ a ~~reduced scope and reduced funding compared with the prior programs;~~

~~the results~~result of the ~~referendum on the UK’s exit from the European Union and related political and economic uncertainty in the UK; and~~

the U.S. federal government's expressed intent to repeal the Patient Protection and Affordable Care Act and replace such law with an alternative proposal. The details of both the extent of the provisions that may be repealedpandemic, as well as ongoing constraints on the ~~details of any potential replacement legislation are uncertain at~~labor market, specifically related to the strain on healthcare professionals, could continue to have an adverse impact on the Company's financial statements. For the NEMT segment, trip volume may have a negative impact on our transportation providers and may result in higher transportation costs as the Company adapts to this ~~time. Enactment of adverse legislation, regulation or agency guidance, may reduce the~~increase in demand for ~~our~~transportation services ~~our ability~~and to ~~conduct some or all of our business and/or reimbursement rates for services performed within our segments.~~

Historically, our segments have grown through organic expansion into new markets and service lines, organic expansion within existing markets and service lines, increases in the number of members served under contracts we have been awarded, the securing of new contracts, and acquisitions. As we continue to focus our attention and capital on our domestic, healthcare services operations ("U.S. Healthcare Services"), we may pursue the acquisition of attractive businesses that are complementary to our U.S. Healthcare Services. In addition, as evidenced by the 2016 Matrix Transaction (as defined below), we may also enter into strategic partnerships if we feel this provides the best opportunity to maximize shareholder value. The pursuit of our strategy may also result in the disposition of current or future investments, as demonstrated in 2017 with our sale of our equity investment in Mission Providence and in 2015 with the sale of our Human Services segment. In coming to these determinations, we base our decisions on a variety of factors, including the availability of ~~alternative opportunities~~transportation providers, should any capacity constraints within our network of transportation providers arise. For the PCS segment, the shortage of caregivers will continue to ~~deploy capital, maximize shareholder value or other strategic considerations. Furthermore,~~impact the volume of service hours that can be provided while also driving increased wage rates, which limits the Company's ability to be profitable in contracts with set rates for various care services. Additionally, changes in membership dynamics at the NEMT segment as a result of Medicaid redetermination and reduction in payor reimbursement rates at the PCS segment in an attempt to contain costs could limit the ability for the Company ~~typically incurs costs~~to generate revenue despite the Company's shift toward emphasizing the importance of value-based care. Any of these circumstances and factors could have a material adverse effect on our reputation and business and any long-term macroeconomic impacts that have arisen as a result of the pandemic could continue to change trends in the market.

Our business environment is competitive, the structural changes in our industry related to ~~merger~~the COVID-19 pandemic have been lasting, the labor market for healthcare professionals remains constrained, and ~~acquisition activities, including third-party costs, whether~~ the ~~transaction is completed~~market price for our common stock on the Nasdaq Stock Market continues to be volatile; the continuing effect of all or ~~not.~~any of the foregoing could result in, in future periods, an impairment to the estimated fair value of the goodwill that has been established for our reporting units. As discussed elsewhere herein and under the caption “Risk Factors” in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2022, impairment tests may be required in addition to the annual impairment testing as of July 1, 2023, if circumstances change that would, more likely than not, reduce the fair value of goodwill of a reporting unit below such reporting unit’s carrying value. The Company monitors the performance of the business and the value of its stock price and estimated fair values of its reporting units, among other relevant considerations, to determine if any impairments to goodwill could exist at any particular time. During our July 1, 2023 annual assessment of goodwill, we determined that based on our qualitative assessment for each reporting unit, factors existed which required us to test our goodwill for impairment. As a result of our quantitative assessment, we determined that the goodwill at our PCS and RPM reporting units was impaired. See Note 7, Goodwill and Intangible Assets, for additional details.

Critical Accounting Estimates and Policies

Other than our change in accounting ~~estimates~~policy related to the change in the date of our annual goodwill test from October 1 to July 1, included in Note 2, Significant Accounting Policies and ~~policies~~

~~As of September~~Recent Accounting Pronouncements in our Form 10-Q for the quarter ended June 30, ~~2017,~~2023, there ~~has~~have been no ~~change in~~significant changes to our critical accounting policies ~~other than~~in our unaudited condensed consolidated financial statements from our Form 10-K for ~~stock-based compensation and recoverability of goodwill, as discussed below.~~the year ended December 31, 2022. For further discussion of our critical accounting policies, see management’s discussion and analysis of financial condition and results of operations contained in our Form 10-K for the year ended December 31, ~~2016.~~2022.

~~Stock-Based Compensation~~Components of Results of Operations

Revenues

Service revenue, net. Service revenue for our NEMT segment includes the revenue generated by providing non-emergency transportation services directly to our customers. These services are provided on either a capitated basis, which means we are paid on a per-member, per-month ("PMPM") basis for each eligible member, or on a fee-for-service ("FFS") basis, which means we are paid based on the volume of trips or services performed. We receive payments for our services from third-party payors, predominately made up of state Medicaid agencies and MCOs.

Our ~~primary forms~~capitated contracts operate under either a Full-Risk or a Shared-Risk structure. Under Full-Risk contracts, which represent approximately 20% of ~~employee stock-based compensation are stock option awards~~our NEMT revenue, payors pay a fixed amount per eligible member per month and ~~restricted stock awards, including certain awards which vest~~we assume the responsibility of meeting the covered healthcare related transportation requirements for the number of eligible members in the payor's program. Revenue is recognized based ~~upon performance conditions. We measure the value of stock option awards~~ on the ~~date~~number of ~~grant at fair value using~~members served during the ~~appropriate valuation techniques, including~~period. Under Shared-Risk contracts, which represent approximately 65% of our NEMT revenue, we have provisions for reconciliations, risk corridors, and/or profit rebates. These contracts allow for periodic reconciliations based on actual cost and or/trip volume and may result in refunds to the ~~Black-Scholes~~payor, or additional payments due from the payor. These shared-risk contracts also allow for margin stabilization, as generally the amount received per member per month is adjusted for the costs to provide the transportation.

Under fee-for-service ("FFS") contracts, which represent approximately 15% of our NEMT revenue, payors pay a specified amount for each service that we provide based on costs incurred plus an agreed-upon margin. FFS revenue is recognized in the period in which the services are rendered and ~~Monte Carlo option-pricing models. We recognize~~is reduced by the ~~fair value as stock-based compensation expense~~estimated impact of contractual allowances.

Service revenue for our PCS segment includes the revenue generated based on the hours incurred by our in-home caregivers to provide services to our customers, primarily on a ~~straight-line~~FFS basis ~~over~~in which we earn a specified amount for each service that we provide. Payment for our PCS services is billed to third-party payors which include, but are not limited to, MCOs, hospitals, Medicaid agencies and programs and other home health care providers who subcontract the ~~requisite~~services to our caregivers, and individuals.

Service revenue for our RPM segment includes the sale of monitoring equipment to our third-party distributors as well as revenue generated from the hours incurred by our Clinical Team for providing monitoring services to our customers, primarily on a PMPM basis for each eligible member. Payment for our monitoring services is billed to third-party payors which include, but are not limited to, national and regional health plans, government-funded benefit programs, healthcare provider organizations, and individuals.

Grant Income

Grant income. The Company has received distributions under the CARES Act Provider Relief Fund ("PRF") and the ARPA Coronavirus State and Local Fiscal Relief Fund ("SLFRF") targeted to providing economic relief and stimulus to combat health and economic impacts of the COVID-19 pandemic.

Operating Expenses

Service expense. Service expense for our NEMT segment includes purchased transportation, operational payroll and other operational related costs. Purchased transportation includes the amounts we pay to third-party service ~~period, which~~providers and is typically dependent upon service volume. Operational payroll predominately includes our contact center operations, customer advocacy and transportation network team. Other operating expenses primarily include operational overhead costs, and operating facilities and related charges. Service expense for our PCS segment includes payroll and other operational related costs for our caregivers to provide in-home care. Service expense for our RPM segment primarily consists of salaries of employees in our contact centers, connectivity costs and occupancy costs.

General and administrative expense. General and administrative expense for all segments consists principally of salaries for administrative employees that support the ~~vesting period. The pricing models require various highly judgmental assumptions including volatility~~operations, occupancy costs, marketing expenditures, insurance, and ~~expected option term. If any~~professional fees.

Impairment of ~~the assumptions used in the models change significantly, stock-based compensation expense may differ materially in the future from~~goodwill. We determined that ~~recorded in the current period.~~

based on our qualitative assessment for each reporting unit, qualitative factors existed which required us to test our goodwill for impairment. As a result of the ~~adoption~~impairment evaluation, we determined that the goodwill within our PCS and RPM reporting units was impaired during the second quarter of ~~Accounting Standards Update (“ASU”) No. 2016-09,~~ ~~Compensation – Stock Compensation (Topic 718): Improvements~~2023.

Depreciation and amortization expense. Depreciation within this caption includes infrastructure items such as computer hardware and software, office equipment, monitoring and vitals equipment, buildings, and leasehold improvements. Amortization expense is generated primarily from amortization of our intangible assets, including payor networks, trade names and developed technology.

Other Expenses (Income)

Interest expense, net. Interest expense consists principally of interest accrued during the period ended September 30, 2023 on the Company’s borrowings outstanding under the Credit Facility and Senior Unsecured Notes, and amortization of deferred financing fees. Refer to ~~Employee Share-Based Payment Accounting~~ ~~(“ASU 2016-09”), effective January 1, 2017, we no longer record stock-based compensation expense~~the “Liquidity and Capital Resources” section below for further discussion of these borrowings.

Equity in net income (loss) of investee, net of ~~estimated forfeitures~~tax. Equity in earnings of equity method investee consists of our proportionate share of equity earnings or losses from our Matrix equity investment held at our Corporate and Other segment, presented net of related taxes, as well as the earnings of our insurance captive held at the NEMT segment.

Income tax ~~effects of awards are treated as discrete items~~(provision) benefit. The Company is subject to federal taxation in the ~~period~~United States and state taxation in the various jurisdictions in which ~~tax windfalls or shortfalls occur. The adoption also impacted~~we operate.

Segment Reporting

Our segments reflect the ~~presentation of cash flows and the computation of earnings per share.~~

~~The adoption of ASU 2016-09 will subject~~manner in which our tax rate to quarterly volatility from the effects of stock award exercises and vesting activities, including the adverse impact on our income tax provision for awards which result in a tax deduction less than the amount recorded for financial reporting purposes based upon the fair value of the award at the grant date. For example, no shares will be distributed under the Company’s 2015 Holding Company LTI Program (the “HoldCo LTIP”) unless the volume weighted average of Providence’s stock price over a 90-day period ending on December 31, 2017 exceeds $56.79. If this market condition is not satisfied, a significant tax shortfall will result, causing an adverse impact on our tax provision.

~~Recoverability of Goodwill~~

~~Goodwill. In accordance with ASC 350,~~ ~~Intangibles-Goodwill and Other~~, we review goodwill for impairment annually, or more frequently, if events and circumstances indicate that an asset may be impaired. Such circumstances could include, but are not limited to: (1) the loss or modification of significant contracts, (2) a significant adverse change in legal factors or in business climate, (3) unanticipated competition, (4) an adverse action or assessment by a regulator, or (5) a significant decline in the Company’s stock price. We perform the annual goodwill impairment test for all reporting units as of October 1.

First, we perform qualitative assessments for each reporting unit to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment suggests that it is more likely than not that the fair value of a reporting unit is less than its carrying value amount, we then perform a quantitative assessment and compare the fair value of the reporting unit to its carrying value.

~~We adopted ASU No. 2017-04,~~ ~~Intangibles-Goodwill and Other (Topic 350):Simplifying the Test for Goodwill Impairment~~ ~~(“ASU 2017-04”) effective April 1, 2017~~. ASU 2017-04 removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of step two of the goodwill impairment test. Instead, if we deem it necessary to perform the quantitative goodwill impairment test in an annual or interim period, we recognize an impairment charge equal to the excess, if any, of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

~~Results of operations~~

~~Segment reporting.~~ ~~Our~~ operations are organized and reviewed by management along our segment lines. We operate in two principal business segments: NET Services and WD Services. Our investment in CCHN Group Holdings, Inc. and its subsidiaries (“Matrix”) is also a reportable segment referred to as the “Matrix Investment”.

On October 19, 2016, affiliates of Frazier Healthcare Partners purchased a 53.2% equity interest in Matrix, with Providence retaining a 46.8% equity interest (the “Matrix Transaction”), resulting in our ownership of a noncontrolling interest (46.6% as of September 30, 2017) in our historical Health Assessment Services (“HA Services”) segment. The HA Services segment results of operations for the periods through October 19, 2016 are separately discussed in the “Discontinued operations, net of tax” section set forth below. The results of operations for periods subsequent to October 19, 2016 are separately discussed in the “Equity in net loss of investees” section set forth below. Additionally, effective November 1, 2015, we completed the sale of our Human Services segment. The Human Services segment results of operations are separately discussed in the “Discontinued operations, net of tax” section set forth below. Subsequent to the sale of our Human Services segment, we have incurred additional expenses in certain periods related to the settlement of indemnification claims and associated legal costs, which are recorded to “Discontinued operations, net of tax”.

management. Segment results are based on how our ~~chief operating decision maker~~CODM manages our business, makes operating decisions and evaluates operating performance.

We operate four reportable business segments: NEMT, PCS, RPM, and Corporate and Other. The NEMT segment provides non-emergency medical transportation services throughout the country. The PCS segment provides non-medical personal care and home health services. The RPM segment provides remote patient monitoring solutions. The operating results of the ~~two principal business segments~~Corporate and Other segment include revenue and expenses incurred by the segment, as well as an allocation of certain direct expenses incurred by our corporate division on behalf of the segment. Indirect expenses, including unallocated corporate functions and expenses, such asactivities related to executive, ~~finance,~~ accounting, ~~human resources, insurance administration,~~finance, internal audit, ~~process improvement, information technology~~tax, legal and ~~legal,~~certain strategic and corporate development functions for each segment, as well as the results of the Matrix investment. The operating results of the NEMT, PCS and RPM segments include revenue and expenses generated and incurred by the segment, and the Corporate and Other segment includes expenses incurred in relation to the Corporate operations of the Company

See Note 3, Segments, in our ~~captive insurance company (the “Captive”) and elimination entries recorded in consolidation are reflected in “Corporate and Other”.~~accompanying unaudited condensed consolidated financial statements for further information on our segments.

Results of Operations

Q3 ~~2017~~2023 compared to Q3 ~~2016~~2022

Consolidated ~~Results.~~results. The following table sets forth results of operations and the percentage of consolidated total ~~revenues~~Service revenue, net represented by items in our unaudited condensed consolidated statements of ~~income~~operations for Q3 ~~2017~~2023 and Q3 ~~2016~~2022 (in thousands):

Three months ended September 30,
2017 2016
$
Percentage
of Revenue
$
Percentage
of Revenue
Service revenue, net 409,517
100.0 % 412,271
100.0 %

Operating expenses:
Service expense 378,032
92.3 % 378,488
91.8 %
General and administrative expense 18,629
4.5 % 17,320
4.2 %
Depreciation and amortization 6,547
1.6 % 6,670
1.6 %
Total operating expenses 403,208
98.5 % 402,478
97.6 %

Operating income 6,309
1.5 % 9,793
2.4 %

Non-operating expense:
Interest expense, net 302
0.1 % 338
0.1 %
Equity in net (gain) loss of investees 460
0.1 % 1,517
0.4 %
Gain on sale of equity investment (12,606 ) 3.1 % —
— %
Loss (gain) on foreign currency transactions 200
— % (482 ) 0.1 %
Income from continuing operations before income taxes 17,953
4.4 % 8,420
2.0 %
Provision for income taxes 2,989
0.7 % 4,678
1.1 %
Income from continuing operations, net of tax 14,964
3.7 % 3,742
0.9 %
Discontinued operations, net of tax (16 ) — % (2,791 ) 0.7 %
Net income 14,948
3.7 % 951
0.2 %
Net loss attributable to noncontrolling interest (95 ) — % (301 ) 0.1 %
Net income attributable to Providence 14,853
3.6 % 650
0.2 %


	Three months ended September 30,
	2023				2022
	Amount		% of Service Revenue		Amount		% of Service Revenue
Service revenue, net	$	686,925	100.0	%	$	647,782	100.0	%
Grant income	551		0.1	%	789		0.1	%

Operating expenses:
Service expense	579,214		84.3	%	534,563		82.5	%
General and administrative expense	70,142		10.2	%	75,889		11.7	%
Depreciation and amortization	26,077		3.8	%	25,672		4.0	%

Total operating expenses	675,433		98.3	%	636,124		98.2	%

Operating income	12,043		1.8	%	12,447		1.9	%


Interest expense, net	17,844		2.6	%	15,557		2.4	%
Loss before income taxes and equity method investment	(5,801)		(0.8)	%	(3,110)		(0.5)	%
Income tax benefit	1,659		0.2	%	1,053		0.2	%
Equity in net loss of investee, net of tax	(160)		—	%	(26,448)		(4.1)	%
Net loss	$	(4,302)	(0.6)	%	$	(28,505)	(4.4)	%

Service revenue, ~~net.~~net. Consolidated service revenue, net, for Q3 ~~2017 decreased $2.8~~2023 increased $39.1 million, or ~~0.7%~~6.0%, compared to Q3 ~~2016. Revenue for Q3 2017 compared to Q3 2016 included a decrease in revenue attributable to WD Services of $10.3 million.~~2022. This ~~decrease in revenue was partially offset~~change is driven primarily by an increase in revenue of $26.2 million at our NEMT segment, with the remainder of the increase at our PCS and RPM segments. See our Results of Operations - Segments, for further discussion.

Grant income. The Company recognized income of approximately $0.6 million during Q3 2023 and $0.8 million during Q3 2022 related to government grant distributions received, primarily under the CARES Act PRF and the ARPA SLFRF. These government grants are targeted to provide economic relief and stimulus to combat health and economic impacts of the COVID-19 pandemic. These funds were received by our PCS segment and are available to eligible providers who have healthcare-related expenses and lost revenues attributable to ~~NET Services of $7.5 million. Excluding the favorable effects of changes in currency exchange rates, consolidated service revenue decreased 0.8%~~COVID-19.

Service expense. Service expense components are shown below (in thousands):


	Three months ended September 30,
	2023				2022
	Amount		% of Service Revenue		Amount		% of Service Revenue
Purchased services	$	363,594	52.9	%	$	340,138	52.5	%
Payroll and related costs	197,009		28.7	%	181,965		28.1	%
Other service expenses	18,611		2.7	%	12,460		1.9	%
Total service expense	$	579,214	84.3	%	$	534,563	82.5	%

Service expense for Q3 ~~2017 compared to Q3 2016.~~

~~Total operating expenses.~~ ~~Consolidated operating expenses for Q3 2017~~2023 increased ~~$0.7~~$44.7 million, or ~~0.2%~~8.4%, compared to Q3 ~~2016. Operating expenses~~2022. This change is primarily due to higher purchased services costs for ~~Q3 2017~~our NEMT segment of $23.5 million which is caused by an increased number of trips serviced when compared to Q3 ~~2016 included~~2022, partially offset by lower cost per trip due to certain volume service commitments with

some of our larger transportation providers and cost savings due to our multi-modal strategy. Payroll and related costs increased by $15.0 million, primarily related to increased labor costs at our PCS segment, driven by an increase in ~~expenses attributable~~hours worked and higher wage rates paid to ~~NET Services~~our caregivers, further contributed to by higher wage rates paid to our call center employees at our NEMT segment. See our Results of ~~$10.8 million~~Operations - Segments, for further discussion.

General and ~~an increase in expenses attributable to Corporate~~administrative expense. General and ~~Other of $0.5 million. This increase in operating expenses was partially offset by a decrease in operating expenses attributable to WD Services of $10.6 million.~~

~~Operating income.~~ ~~Consolidated operating income~~administrative expense for Q3 ~~2017~~2023 decreased ~~$3.5~~$5.7 million, or ~~35.6%~~7.6%, compared to Q3 ~~2016.~~2022. General and administrative expense, expressed as a percentage of service revenue, net decreased to 10.2% for Q3 2023 compared to 11.7% for Q3 2022. See our Results of Operations - Segments, for further discussion.

Depreciation and amortization. Depreciation and amortization remained consistent from Q3 2022 to Q3 2023 with an increase of $0.4 million, or 1.6%.

Interest expense, net. Interest expense, net, for Q3 2023 and Q3 2022 was $17.8 million and $15.6 million, respectively. During Q3 2023, we incurred $8.1 million and $6.6 million of interest expense related to the Senior Notes due 2025 and 2029, respectively. The ~~decrease was primarily attributable to a decrease in operating income~~remainder of the interest expense in Q3 ~~2017~~2023 is related to interest and fees on the credit facility, which increased during Q3 2023 due to increased borrowing on the credit facility as compared to Q3 ~~2016~~2022. Interest expense is recorded at ~~NET Services of $3.3 million and an increase in~~our Corporate and Other ~~operating loss of $0.6 million. This decrease in operating income was partially offset by an increase in WD Services operating income of $0.3 million.~~segment.

~~Interest expense, net.~~ ~~Consolidated interest expense, net for Q3 2017 and Q3 2016 remained relatively consistent.~~

Equity in net ~~(gain) loss~~income (loss) of ~~investees.~~ ~~Equity in~~investee, net ~~(gain) loss~~ of investees primarily relates to our investments in Mission Providence and Matrix. Mission Providence, which was sold effective September 29, 2017, was part of WD Services, and began providing services in July 2015. We recorded 75% of Mission Providence’s profit or loss in equity in net (gain) loss of investees. We began reporting Matrix as an equity investment effective October 19, 2016, upon the completion of the Matrix Transaction, and record our share of Matrix’s profit or loss in net (gain) loss of investees.tax. Our equity in net loss of ~~investees~~investee, net of tax, for Q3 ~~2017~~2023 of ~~$0.5~~$0.2 million ~~primarily related to~~and our equity in net loss ~~for Mission Providence~~ of ~~$0.5 million. Matrix was close to break-even on a~~investee, net ~~income basis in Q3 2017. Included in Matrix’s results are depreciation and amortization~~ of ~~$8.5 million, interest expense~~tax, of ~~$3.7 million, equity compensation of $0.6 million, management fees paid to certain of Matrix’s shareholders of $0.6 million and merger and acquisition related diligence costs of $0.3 million.~~

~~Gain on sale of equity investment.~~ The gain on sale of equity investment of $12.6 million relates to the sale of the Company's equity interest in Mission Providence effective September 29, 2017. The investment in Mission Providence was part of the WD Services segment.

~~Loss (gain) on foreign currency transactions.~~ ~~The foreign currency loss of $0.2 million and foreign currency gain of $0.5~~$26.4 million for Q3 ~~2017 and Q3 2016, respectively, were primarily due to translation adjustments~~2022 was a result of our ~~foreign subsidiaries.~~proportional share of the net income or loss of Matrix and our investment in a captive insurance program. The loss in Q3 2022 was the result of an asset impairment that occurred at Matrix during Q3 2022 compared to no asset impairment during Q3 2023.

~~Provision for income taxes.~~Income tax (provision) benefit. Our effective tax ~~rate~~rates from ~~continuing~~ operations for Q3 ~~2017~~2023 and Q3 ~~2016 was 16.7%~~2022 were a tax benefit of 28.6% and ~~55.6%~~33.9%, respectively. ~~The~~For both periods, the effective tax ~~rate exceeded~~rates for the benefits were significantly higher than the U.S. federal statutory rate of ~~35% for Q3 2016~~21.0% primarily due to foreign net operating losses (including equity investment losses) for which the future income tax benefit currently cannot be recognized, losses in foreign jurisdictions with tax rates lower than the U.S. rate of 35%, state income taxes and ~~certain non-deductible~~nondeductible expenses. Foreign net operating losses for which no tax benefit can be provided were higher in Q3 2016 versus Q3 2017 resulting in a decrease in the effective tax rate from Q3 2016 to Q3 2017. Additionally, there is no provision for income taxes related to the gain on sale of equity investment of $12.6 million due to the substantial difference in tax basis versus book basis in the investment.

~~The Company recorded excess tax deficiencies related to stock-based compensation for the three~~

Nine months ended September 30, 2017 of $0.3 million which increased the provision for income taxes. The adoption of ASU 2016-09 subjects our tax rate to quarterly volatility from the effects of stock award exercises and vesting activities, including the adverse impact on our income tax provision for awards which result in a tax deduction less than the amount recorded for financial reporting purposes based upon fair value of the award at the grant date.

~~Discontinued operations, net of tax.~~ Discontinued operations, net of tax, includes the activity of our former Human Services segment and our former HA Services segment, composed entirely of our 100% equity interest in Matrix until the completion of the Matrix Transaction on October 19, 2016. For Q3 2017, discontinued operations, net of tax for our Human Services segment was break-even. For Q3 2016, discontinued operations, net of tax for our Human Services segment was a loss of $5.0 million, and discontinued operations, net of tax for our HA Services segment was net income of $2.2 million. See Note 13, ~~Discontinued Operations,~~ ~~to our condensed consolidated financial statements for additional information.~~

~~Net loss attributable to noncontrolling interests.~~ Net loss attributable to noncontrolling interests primarily relates to a minority interest held by a third-party operating partner in our company servicing the offender rehabilitation contract in our WD Services segment.

~~YTD 2017~~2023 compared to ~~YTD 2016~~nine months ended September 30, 2022

Consolidated results.The following table sets forth results of operations and the percentage of consolidated total ~~revenues~~Service revenue, net represented by items in our unaudited condensed consolidated statements of ~~income for YTD 2017 and YTD 2016 (in thousands):~~

Nine months ended September 30,
2017 2016
$ Percentage of Revenue $ Percentage of Revenue
Service revenue, net 1,216,994
100.0 % 1,192,426
100.0 %

Operating expenses:
Service expense 1,124,478
92.4 % 1,095,011
91.8 %
General and administrative expense 53,705
4.4 % 52,548
4.4 %
Depreciation and amortization 19,716
1.6 % 20,058
1.7 %
Total operating expenses 1,197,899
98.4 % 1,167,617
97.9 %

Operating income 19,095
1.6 % 24,809
2.1 %

Non-operating expense:
Interest expense, net 983
0.1 % 1,239
0.1 %
Equity in net loss of investees 991
0.1 % 5,693
0.5 %
Gain on sale of equity investment (12,606 ) 1.0 % —
— %
Loss (gain) on foreign currency transactions 600
— % (1,332 ) 0.1 %
Income from continuing operations before income taxes 29,127
2.4 % 19,209
1.6 %
Provision for income taxes 8,391
0.7 % 12,466
1.0 %
Income from continuing operations, net of tax 20,736
1.7 % 6,743
0.6 %
Discontinued operations, net of tax (6,000 ) 0.5 % 332
— %
Net income 14,736
1.2 % 7,075
0.6 %
Net (income) loss attributable to noncontrolling interest (295 ) — % 433
— %
Net income attributable to Providence 14,441
1.2 % 7,508
0.6 %

~~Service revenue, net.~~ Consolidated service revenue, net for YTD 2017 increased $24.6 million, or 2.1%, compared to YTD 2016. Revenue for YTD 2017 compared to YTD 2016 included an increase in revenue attributable to NET Services of $70.5 million. This increase in revenue was partially offset by a decrease in revenue attributable to WD Services of $46.0 million. Excluding the effects of changes in currency exchange rates, consolidated service revenue increased 3.1% for YTD 2017 compared to YTD 2016.

~~Total operating expenses.~~ Consolidated operating expenses for YTD 2017 increased $30.3 million, or 2.6%, compared to YTD 2016. Operating expenses for YTD 2017 compared to YTD 2016 included an increase in expenses attributable to NET Services of $82.1 million. This increase in operating expenses was partially offset by a decrease in operating expenses attributable to WD Services of $51.6 million and a decrease in operating expenses attributable to Corporate and Other of $0.1 million.

~~Operating income.~~ Consolidated operating income for YTD 2017 decreased $5.7 million, or 23.0%, compared to YTD 2016. The decrease was primarily attributable to a decrease in operating income attributable to NET Services of $11.6 million as compared to YTD 2016. This decrease in operating income was partially offset by a decrease in WD Services operating loss of $5.7 million and a decrease in Corporate and Other operating loss of $0.2 million.

~~Interest expense, net.~~ ~~Consolidated interest expense, net for YTD 2017 decreased $0.3 million, or 20.7%, compared to YTD 2016.~~

~~Equity in netlossof investees.~~ Our equity in net loss of investees for YTD 2017 of $1.0 million includes an equity in net loss for Mission Providence of $1.4 million, partially offset by equity in net gain of Matrix of $0.4 million. Included in Matrix’s results are depreciation and amortization of $24.6 million, interest expense of $11.0 million, transaction bonuses and other transaction related costs of $3.5 million, equity compensation of $1.9 million, management fees paid to Matrix’s shareholders of $1.8 million, merger and acquisition diligence related costs of $0.3 million and income tax benefit of $0.1 million.

~~Loss (gain) on foreign currency transactions.~~ ~~The foreign currency loss of $0.6 million and foreign currency gain of $1.3 million for YTD 2017 and YTD 2016, respectively, were primarily due to translation adjustments of our foreign subsidiaries.~~

~~Provision for income taxes.~~ ~~Our effective tax rates from continuing~~ operations for YTD 2017 and YTD 2016 was 28.8% and 64.9%, respectively. The effective tax rate exceeded the U.S. federal statutory rate of 35% for YTD 2016 primarily due to foreign net operating losses (including equity investment losses) for which the future income tax benefit currently cannot be recognized, losses in foreign jurisdictions with tax rates lower than the U.S. rate of 35%, state income taxes, and certain non-deductible expenses. Foreign net operating losses for which no tax benefit can be provided were higher in YTD 2016 versus YTD 2017 resulting in a decrease in the effective tax rate from YTD 2016 to YTD 2017. Additionally, there was no provision for income taxes related to the gain on sale of equity investment of $12.6 million due to the substantial difference in tax basis versus book basis in the investment.

~~The Company recorded excess tax deficiencies related to stock-based compensation~~ for the nine months ended September 30, ~~2017 of $0.1 million~~2023, which ~~increased~~we refer to as “YTD 2023”, and for the ~~provision for income taxes. The adoption of ASU 2016-09 subjects our tax rate~~nine months ended September 30, 2022, which we refer to quarterly volatility from the effects of stock award exercises and vesting activities, including the adverse impact on our income tax provision for awards which result in a tax deduction less than the amount recorded for financial reporting purposes based upon fair value of the award at the grant date.

~~Discontinued operations, net of tax.~~ Discontinued operations, net of tax, includes the activity of our former Human Services segment and our former HA Services segment, composed entirely of our 100% equity interest in Matrix until the completion of the Matrix Transaction on October 19, 2016. For YTD 2017, discontinued operations, net of tax for our Human Services segment was a loss of $6.0 million, which primarily related to the accrual of a contingent liability of $9.0 million related to the settlement of indemnification claims and associated legal costs of $0.6 million, partially offset by a related tax benefit. For YTD 2016, discontinued operations, net of tax for our Human Services segment was a net loss of $5.0 million, and discontinued operations, net of tax for our HA Services segment was net income of $5.4 million. See Note 13, ~~Discontinued Operations,~~ ~~to our condensed consolidated financial statements for additional information.~~

~~Net (income) loss attributable to noncontrolling interests.~~ Net (income) loss attributable to noncontrolling interests primarily relates to a minority interest held by a third-party operating partner in our company servicing the offender rehabilitation contract in our WD Services segment.

~~Segment Results.~~ ~~The following analysis includes discussion of each of our segments.~~

~~NET Services~~

~~NET Services segment financial results are~~ as ~~follows for Q3 2017 and Q3 2016~~“YTD 2022” (in thousands):


	Three Months Ended September 30,							Nine months ended September 30,
	2017			2016				2023				2022
	$	Percentage of Revenue		$	Percentage of Revenue			Amount		% of Service Revenue		Amount		% of Service Revenue
Service revenue, net	324,824	100.0	%	317,280	100.0	%	Service revenue, net	$	2,048,338	100.0	%	$	1,850,472	100.0	%
Grant income							Grant income	4,649		0.2	%	4,587		0.2	%

Operating expenses:							Operating expenses:
Service expense	304,454	93.7	%	293,919	92.6	%	Service expense	1,718,735		83.9	%	1,498,108		81.0	%
General and administrative expense	2,899	0.9	%	2,860	0.9	%	General and administrative expense	229,095		11.2	%	232,108		12.5	%
Depreciation and amortization	3,286	1.0	%	3,051	1.0	%	Depreciation and amortization	77,679		3.8	%	74,376		4.0	%
Operating income	14,185	4.4	%	17,450	5.5	%
Impairment of goodwill							Impairment of goodwill	183,100		8.9	%	—		—	%
Total operating expenses							Total operating expenses	2,208,609		107.8	%	1,804,592		97.5	%

Operating income (loss)							Operating income (loss)	(155,622)		(7.6)	%	50,467		2.7	%

Interest expense, net							Interest expense, net	50,769		2.5	%	46,429		2.5	%

Income (loss) before income taxes and equity method investment							Income (loss) before income taxes and equity method investment	(206,391)		(10.1)	%	4,038		0.2	%
Income tax (provision) benefit							Income tax (provision) benefit	4,362		0.2	%	(877)		—	%
Equity in net income (loss) of investee, net of tax							Equity in net income (loss) of investee, net of tax	2,821		0.1	%	(28,020)		(1.5)	%
Net loss							Net loss	$	(199,208)	(9.7)	%	$	(24,859)	(1.3)	%

Service revenue, net. ~~Service~~ Consolidated service revenue, net, for ~~NET Services for Q3 2017~~YTD 2023 increased ~~$7.5~~$197.9 million, or 2.4%, compared to Q3 2016. The increase was primarily related to net increased revenue from existing contracts of $19.2 million, due to the net impact of membership and rate changes, including final agreement on a rate adjustment related to increased utilization and the release of previously accrued revenue hold-backs based on certain contract performance requirements on a significant contract, in addition to the impact of new contracts which contributed $18.8 million of revenue for Q3 2017. These increases were partially offset by the impact of contracts we no longer serve, including a contract with the state of New York, which resulted in a decrease in revenue of $30.5 million.

~~Service expense, net.~~ ~~Service expense for our NET Services segment included the following for Q3 2017 and Q3 2016 (in thousands):~~

Service expense for Q3 2017 increased $10.5 million, or 3.6%, compared to Q3 2016 due primarily to higher purchased services and other operating costs, partially offset by decreased payroll and related costs.

Purchased services as a percentage of revenue increased from 76.2% in Q3 2016 to 77.1% in Q3 2017 primarily attributable to an increase in utilization across certain contracts, including multiple managed care contracts in California, and the impact of new managed care organization contracts in certain markets being at a lower margin than previous contracts. These increases were partially offset by initiatives aimed at better aligning the rates we pay to our transportation provider partners with local market conditions and the fees paid to us by our customers. In addition, the impact of Hurricane Irma resulted in decreased utilization for certain contracts.

Payroll and related costs as a percentage of revenue decreased from 13.2% in Q3 2016 to 12.5% in Q3 2017 due to efficiencies gained from multiple process improvement initiatives, including those aimed at lowering payroll expense across our reservation and operation center networks, as well as a decrease in incentive compensation. Other operating expenses increased for Q3 2017 as compared to Q3 2016 primarily attributable to an incremental $1.5 million of value enhancement and related costs incurred for external resources used in the design and implementation of NET Services member experience and value enhancement initiatives, as well as increased software and hardware maintenance costs associated with new technology initiatives.

~~General and administrative expense.~~ ~~General and administrative expense in Q3 2017 remained constant as compared to Q3 2016. As a percentage of revenue, general and administrative expense remained constant at 0.9%.~~

~~Depreciation and amortization.~~ Depreciation and amortization increased $0.2 million primarily due to the addition of long-lived assets relating to information technology projects. As a percentage of revenue, depreciation and amortization remained constant at 1.0% for Q3 2016 and Q3 2017.

~~NET Services segment financial results are as follows for YTD 2017 and YTD 2016 (in thousands):~~

~~Service revenue, net.~~ ~~Service revenue, net for NET Services for YTD 2017 increased $70.5 million, or 7.7%~~10.7%, compared to YTD ~~2016. The~~2022. This change is driven primarily by an increase was primarily related to net increased revenue from existing contracts of $68.3 million, due to the net impact of membership and rate changes, including final agreement on a rate adjustment related to increased utilization and the release of previously accrued revenue hold-backs based on certain contract performance requirements on a significant contract, in addition to the impact of new contracts, including new managed care organization contracts in Florida and New York, which contributed $70.5 million of revenue for YTD 2017. These increases were partially offset by the impact of contracts we no longer serve, including a contract with the state of New York, which resulted in a decrease in revenue of ~~$68.3 million.~~ $142.9 million at our NEMT segment, with the remainder of the increase at our PCS and RPM segments. See our Results of Operations - Segments, for further discussion.

Service expense for YTD ~~2017~~2023 increased ~~$80.8~~$220.6 million, or ~~9.5%~~14.7%, compared to YTD ~~2016~~2022 primarily due ~~primarily~~ to higher purchased services ~~and other operating costs, with a slight~~for our NEMT segment of $149.9 million related to an increase in ~~payroll~~transportation costs. Payroll and related ~~costs.~~

~~The increase in service~~

Results of Operations - Segments

The following tables set forth certain financial information attributable to the Company’s business segments for the three and nine months ended September 30, 2023 and 2022:

(in thousands, except for revenue per member per month, revenue per trip, and service expense per trip)


	Three months ended September 30,								Nine months ended September 30,
	2023				2022				2023				2022
	Amount			% of Segment Revenue	Amount			% of Segment Revenue	Amount			% of Segment Revenue	Amount			% of Segment Revenue
Operating Results
Service revenue, net	$	485,951		100.0%	$	459,796		100.0%	$	1,452,389		100.0%	$	1,309,449		100.0%

Service expense	428,021			88.1%	394,981			85.9%	1,277,604			88.0%	1,100,801			84.1%
General and administrative expense	25,433			5.2%	31,815			6.9%	87,645			6.0%	102,736			7.8%
Depreciation and amortization	6,814			1.4%	7,079			1.5%	20,319			1.4%	21,576			1.6%
Operating income	$	25,683		5.3%	$	25,921		5.6%	$	66,821		4.6%	$	84,336		6.4%

Business Metrics(1)
Total paid trips	8,824				8,045				25,761				22,987
Average monthly members	33,660				36,026				33,892				33,998

Revenue per member per month	$	4.81			$	4.25			$	4.76			$	4.28
Revenue per trip	$	55.07			$	57.15			$	56.38			$	56.96
Service expense per trip	$	48.51			$	49.10			$	49.59			$	47.89
Monthly utilization	8.7		%		7.4		%		8.4		%		7.5		%

(1) These metrics are key performance indicators that management uses to evaluate our performance. Trends established in these metrics can be used to evaluate current operating results, identify trends affecting our business, determine the allocation of resources and understand the underlying drivers of costs and revenue for our business. We believe these metrics are useful to investors in evaluating and understanding our business but should not be used solely in assessing the Company’s performance. These key performance indicators should not be considered superior to, as a substitute for or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented herein to fully evaluate and understand the business as a whole.

Our NEMT segment is the largest manager of non-emergency medical transportation programs for state governments and MCOs in the U.S.

The change in revenue is impacted by both the change in average monthly members, as well we the rate received per member. The change in average monthly members is correlated to the change in revenue because a majority of our contracts are capitated, and we receive monthly payments on a per member per month basis in return for full or shared risk of transportation volumes. Declines in membership over the periods presented were anticipated and primarily related to Medicaid redetermination efforts, along with certain contract losses. While membership decreased, revenue increased ~~from 75.8%~~due to increases in the average rate received per member, which increases in line with increases in utilization or trip volume in our shared risk contracts. As most of our capitated contracts have been restructured to a shared risk format, revenue increased despite the

decline in membership. Trip volume increases also positively affected revenue for fee-for-service contracts due to a larger number of services performed.


	Three months ended September 30,								Nine months ended September 30,
	2023				2022				2023				2022
	Amount		% of Segment Revenue		Amount		% of Segment Revenue		Amount		% of Segment Revenue		Amount		% of Segment Revenue
Purchased services	$	363,594	74.8	%	$	340,138	74.0	%	$	1,085,206	74.7	%	$	935,298	71.4	%
Payroll and related costs	51,655		10.6	%	46,160		10.0	%	155,388		10.7	%	136,916		10.5	%
Other service expenses	12,772		2.6	%	8,683		1.9	%	37,010		2.5	%	28,587		2.2	%
Total service expense	$	428,021	88.1	%	$	394,981	85.9	%	$	1,277,604	88.0	%	$	1,100,801	84.1	%

Service expense for our NEMT segment primarily consists of transportation costs paid to third party service providers, salaries of employees within our contact centers and operations centers, and occupancy costs. Service expense increased by $33.0 million, or 8.4%, for Q3 2023, as compared to Q3 2022, primarily related to higher purchased services of $23.5 million or 6.8%. Service expense increased by $176.8 million and 16.1% for YTD ~~2016~~2023, as compared to ~~77.6% in~~ YTD ~~2017~~2022, primarily ~~attributable~~due to an increase in ~~utilization across multiple contracts.~~purchased services of $149.9 million or 16.0%. The ~~higher utilization was~~increase in ~~part~~purchased services for both Q3 2023 and YTD 2023 is related to an increase in transportation costs driven by higher trip volume. Trip volume for QTD 2023 and YTD 2023 increased ~~Medicaid reimbursement~~by 9.7% and 12.1%, respectively, when compared to the same periods in ~~New Jersey for certain medical services, which in turn~~the prior year. For YTD 2023, cost per trip increased ~~demand for transportation services; increased utilization across multiple managed care contracts in California; and lower cancellation rates across multiple contracts, which we believe was primarily~~by 3.5% due to ~~milder winter weather conditions during the first quarter of 2017, although we did experience lower utilization~~increased wages for ~~contracts in Q3 2017 due in part to the impact of the Hurricane Irma.~~

Payroll and related costs as a percentage of revenue decreased from 13.3% in YTD 2016 to 12.4% in YTD 2017 due to efficiencies gained from multiple process improvement initiatives, including those aimed at lowering payroll expense across our ~~reservation and operation center networks, as well as a decrease in incentive compensation. Other operating expenses increased for YTD 2017~~transportation providers as compared to YTD ~~2016~~2022, however for QTD 2023, cost per trip decreased by 1.2% primarily ~~attributable~~due to an incremental $3.5 million of value enhancement and related costs incurred for external resources used in the design and implementation of NET Services member experience and value enhancement initiatives in YTD 2017.cost savings from our multi-modal strategy, as compared to QTD 2022.

~~Depreciation and amortization.~~ Depreciation and amortization increased $0.9 million primarily due to the addition of long-lived assets relating to information technology projects. As a percentage of revenue, depreciation and amortization remained constant at 1.0%.

~~WD Services segment financial results are as follows for Q3 2017 and Q3 2016 (in thousands):~~

~~Service revenue, net.~~ Service revenue, net for Q3 2017 decreased $10.3 million, or 10.8%, compared to Q3 2016. Excluding the favorable effects of changes in currency exchange rates, service revenue decreased 11.2% in Q3 2017 compared to Q3 2016. This decrease was primarily related to the anticipated ending of referrals under the segment’s primary employability program in the UK, as well as decreased revenue under our offender rehabilitation program due to $5.4 million of revenue recognized in Q3 2016 related to the finalization of a contractual adjustment for the prior contract years ended March 31, 2015 and 2016.

~~These revenue decreases were partially offset by increases in health services in the UK and various employability contracts outside the UK, including France, Australia and Germany.~~

~~Service expense.~~ ~~Service expense for our WD Services segment included the following for Q3 2017 and Q3 2016 (in thousands):~~

~~Service expense in Q3 2017 decreased $10.5 million, or 12.5%, compared to Q3 2016. Payroll and related costs decreased~~2022, primarily as a result of ~~the ending of referrals under the segment’s primary employability program~~various cost savings initiatives which resulted in ~~the UK~~lower personnel and lower professional services costs, as well as ~~redundancy plans across the WD Services operations~~lower legal costs related to a case that ~~have better aligned headcount with service delivery volumes, resulting~~was settled in ~~a decrease of payroll~~2022.

(in thousands, except Service revenue per hour and Service expense per hour)


	Three months ended September 30,						Nine months ended September 30,
	2023			2022			2023			2022
	Amount		% of Segment Revenue	Amount		% of Segment Revenue	Amount		% of Segment Revenue	Amount		% of Segment Revenue
Operating Results
Service revenue, net	$	179,979	100.0%	$	169,226	100.0%	$	534,435	100.0%	$	491,661	100.0%
Grant income	551		0.3%	789		0.5%	4,649		0.9%	4,587		0.9%

Service expense	143,078		79.5%	132,746		78.4%	417,636		78.1%	379,423		77.2%
General and administrative expense	20,252		11.3%	22,057		13.0%	63,480		11.9%	68,536		13.9%
Depreciation and amortization	12,850		7.1%	12,919		7.6%	38,590		7.2%	37,976		7.7%
Impairment of goodwill	—		—%	—		—%	137,331		25.7%	—		—%
Operating income (loss)	$	4,350	2.4%	$	2,293	1.4%	$	(117,953)	(22.1)%	$	10,313	2.1%

Business Metrics(1)
Total hours	6,995			6,836			20,752			20,076
Service revenue per hour	$	25.73		$	24.76		$	25.75		$	24.49
Service expense per hour	$	20.45		$	19.42		$	20.13		$	18.90

(1) These metrics are key performance indicators that management uses to evaluate our performance. Trends established in these metrics can be used to evaluate current operating results, identify trends affecting our business, determine the allocation of ~~client referrals under~~resources and understand the underlying drivers of costs and revenue for our ~~primary employability program~~business. We believe these metrics are useful to investors in evaluating and understanding our business but should not be used solely in assessing the Company’s performance. These key performance indicators should not be considered superior to, as a substitute for or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented herein to fully evaluate and understand the business as a whole.

Our PCS segment’s services include placements of non-medical personal care assistants and home health aides and nurses primarily to Medicaid patient populations in need of care monitoring and assistance performing daily living activities in the ~~UK, which resulted in a decline in the use of outsourced services.~~ home setting, including senior citizens and disabled adults.

~~Depreciation and amortization.~~ ~~Depreciation and amortization for~~ Q3 ~~2017 decreased $0.3 million~~2023 as compared to Q3 ~~2016,~~2022, as well as 3.9% higher rates per member. Service revenue, net increased by $42.8 million, or 8.7%, for YTD 2023 as compared to YTD 2022, primarily due to ~~the asset impairment charges incurred~~3.4% higher hours worked by personal care providers during ~~the fourth quarter of 2016, which decreased the value of our intangible assets and certain property and equipment.~~

~~WD Services segment financial results are~~YTD 2023 as ~~follows for YTD 2017 and YTD 2016 (in thousands):~~

~~Service revenue, net.~~ ~~Service revenue, net for YTD 2017 decreased $46.0 million, or 16.7%,~~ compared to YTD 2016. Excluding the effects of changes in currency exchange rates, service revenue decreased 12.3% in YTD 2017 compared to YTD 2016. This decrease was primarily related to the anticipated decline of referrals under the segment’s primary employability program in the UK,2022, as well as ~~decreased revenue under~~5.1% higher rates per member.

~~Service expense.~~


	Three months ended September 30,								Nine months ended September 30,
	2023				2022				2023				2022
	Amount		% of Segment Revenue		Amount		% of Segment Revenue		Amount		% of Segment Revenue		Amount		% of Segment Revenue
Payroll and related costs	$	141,921	78.9	%	$	132,482	78.3	%	$	413,995	77.5	%	$	374,994	76.3	%
Other service expenses	1,157		0.6	%	264		0.1	%	3,641		0.7	%	4,429		0.9	%
Total service expense	$	143,078	79.5	%	$	132,746	78.4	%	$	417,636	78.1	%	$	379,423	77.2	%

Service expense for our ~~WD Services~~PCS segment ~~included~~primarily consists of salaries for our employees who provide personal care services and it typically trends with the ~~following for YTD 2017~~number of hours worked and ~~YTD 2016 (in thousands):~~

cost per hour of service. Service expense ~~in YTD 2017 decreased $48.1~~for Q3 2023 increased by $10.3 million, or ~~19.4%~~7.8%, as compared to YTD 2016. Payroll and related costs decreased primarily as a result of declining referrals under the segment’s primary employability program in the UK as well as redundancy plans that have better aligned headcount with service delivery volumes resulting in a decrease of payroll and related costs as a percentage of revenue. Payroll and related costs include $1.1 million and $5.2 million in YTD 2017 and YTD 2016, respectively, of termination benefits related to redundancy plans. Purchased services decreased in YTD 2017 compared to YTD 2016Q3 2022, primarily as a result of a ~~decline in client referrals under our primary employability program in the UK, which resulted in a decline in the use of outsourced services.~~

~~General and administrative expense.~~ General and administrative expense in YTD 2017 decreased $2.3 million compared to YTD 2016 due to office closures associated with restructuring of the UK operations, as well as lower rent for certain offices.

~~Depreciation and amortization.~~ Depreciation and amortization for YTD 2017 decreased $1.2 million compared to YTD 2016, primarily due to the asset impairment charges incurred during the fourth quarter of 2016, which decreased the value of our intangible assets and certain property and equipment.

~~Corporate and Other~~

Corporate and Other includes the headcount and professional service costs incurred at the holding company level, at the Captive, and elimination entries to account for inter-segment transactions. Corporate and Other financial results are as follows for Q3 2017 and Q3 2016 (in thousands):

~~Operating loss.~~ ~~Corporate and Other operating loss in Q3 2017 increased by $0.6 million or 6.7% as compared to Q3 2016. This increase was primarily related to a $2.0 million~~5.3% increase in ~~professional costs due to activities associated with~~service expense per hour, driven primarily by increased wage rates for our ~~increased focus on strategic initiatives,~~caregivers, predominately from wage pressures in New York, as well as a ~~$0.6 million~~2.3% increase in ~~compensation, including the timing impact~~hours of accruals for incentive compensation. These increases were partially offset by decreases in legal and accounting fees and lower costs in the Company's captive insurance program due to the Company ceasing to write new policies under the captive in Q2 2017, which drove the decrease in “Service expense”.

~~General and administrative~~service during Q3 2023. Service expense includes stock-based compensation for the HoldCo LTIP of $1.0 million and $0.9 million for Q3 2017 and Q3 2016, respectively. No shares will be distributed under the HoldCo LTIP unless the volume weighted average of Providence’s stock price over a 90-day period ending on December 31, 2017 exceeds $56.79.

~~Corporate and Other financial results are as follows~~ for YTD ~~2017 and YTD 2016 (in thousands):~~

~~Operating loss.~~ ~~Corporate and Other operating loss in YTD 2017 decreased~~2023 increased by ~~$0.2~~$38.2 million or ~~0.8%~~10.1%, as compared to YTD 2016. This decrease was primarily related to a reduction in insurance loss reserves in 2017 due to favorable claims history of our Captive reinsurance programs, which is included in “Service expense” as well as decreased accounting, legal and professional fees included in “General and administrative expense”. This decrease was partially offset by an increase in cash settled stock-based compensation expense of $1.3 million,2022, primarily as a result of a ~~more significant~~6.5% increase in service expense per hour and a 3.4% increase in hours of service during YTD 2023.

(in thousands, except Revenue per member per month and Service expense per member per month)


	Three months ended September 30,								Nine months ended September 30,
	2023				2022				2023				2022
	Amount		% of Segment Revenue		Amount		% of Segment Revenue		Amount		% of Segment Revenue		Amount		% of Segment Revenue
Operating Results
Service revenue, net	$	19,779	100.0	%	$	18,760	100.0	%	$	57,702	100.0	%	$	49,362	100.0	%

Service expense	6,934		35.1	%	6,836		36.4	%	20,129		34.9	%	17,884		36.2	%
General and administrative expense	5,685		28.7	%	5,816		31.0	%	16,781		29.1	%	17,520		35.5	%
Depreciation and amortization	6,174		31.2	%	5,467		29.1	%	18,087		31.3	%	14,201		28.8	%
Impairment of goodwill	—		—	%	—		—	%	45,769		79.3	%	—		—	%
Operating income (loss)	$	986	5.0	%	$	641	3.4	%	$	(43,064)	(74.6)	%	$	(243)	(0.5)	%

Business Metrics(1)
Average monthly members	247				230				241				201
Revenue per member per month	$	26.69			$	27.19			$	26.60			$	27.29
Service expense per member per month	$	9.36			$	9.91			$	9.28			$	9.89

Our RPM segment is a provider of remote patient monitoring solutions and manages a comprehensive suite of services, including personal emergency response systems, vitals monitoring and data-driven patient engagement solutions.


	Three months ended September 30,								Nine months ended September 30,
	2023				2022				2023				2022
	Amount		% of Segment Revenue		Amount		% of Segment Revenue		Amount		% of Segment Revenue		Amount		% of Segment Revenue

Payroll and related costs	$	3,414	17.3	%	$	3,323	17.7	%	$	9,941	17.2	%	$	8,646	17.5	%
Other service expenses	3,520		17.8	%	3,513		18.7	%	10,188		17.7	%	9,238		18.7	%
Total service expense	$	6,934	35.1	%	$	6,836	36.4	%	$	20,129	34.9	%	$	17,884	36.2	%

Service expense for our RPM segment primarily consists of salaries for the employees providing the remote monitoring services and it typically trends with the number of hours worked. Service expense for Q3 2023, remained consistent for Q3 2023 as compared to Q3 2022 with an increase of $0.1 million, or 1.4%, as compared to Q3 2022. Service expense for

YTD 2023 increased $2.2 million, or 12.6%, as compared to YTD 2022, primarily as a result of an increase in ~~stock settled stock-based compensation expense of $1.4 million, primarily related~~direct wages driven by the additional hours worked to anservice the 19.9% increase in ~~expense for the HoldCo LTIP and a benefit recorded in YTD 2016 for performance based units, with no corresponding benefit in YTD 2017,~~average monthly members as well as an increase ~~of $3.6 million of professional~~in device connectivity costs ~~due~~related to ~~activities associated with our increased focus on strategic initiatives.~~the additional devices deployed to service the increase in average monthly members.

Corporate and Other Segment


	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
	Amount		Amount		Amount		Amount
Service revenue, net	$	1,216	$	—	$	3,812	$	—

Service expense	1,181		—		3,366		—
General and administrative expense	18,772		16,201		61,189		43,316
Depreciation and amortization	239		207		683		623
Operating income (loss)	$	(18,976)	$	(16,408)	$	(61,426)	$	(43,939)

Our Corporate and Other segment includes ~~stock-based compensation for~~ the ~~HoldCo LTIP~~Company's executive, accounting, finance, internal audit, tax, legal, public reporting, and corporate development functions. This segment also includes the results of ~~$3.1~~our equity investment in Matrix and the operating results of investments in innovation related to data analytics products and solutions, which contributes to our strategic investment in growth.

Our ~~quarterly~~NEMT segment's operating ~~results~~income and ~~operating~~ cash flows normally fluctuate as a result of seasonal variations in our business, principally due ~~in part~~ to ~~seasonal factors, uneven~~lower transportation demand ~~for services~~during the winter season and ~~the timing of new contracts, which impact the amount of revenues earned and expenses incurred. NET Services experiences fluctuations in~~higher demand during the summer season.

Our PCS segment’s operating income and ~~winter seasons. Due to historically higher demand~~cash flows also normally fluctuate as a result of seasonal variations in the ~~summer months,~~business, principally due to somewhat lower demand ~~during the winter, and a primarily fixed revenue stream based on a per-member, per-month payment structure, NET Services normally experiences lower operating margins~~for in-home services from caregivers during the summer ~~season~~ and ~~higher~~periods with major holidays, as patients may spend more time with family and less time alone needing outside care during those periods.

Our RPM segment’s operating margins during the winter. WD Services is impacted by both the timing of commencement and expiration of major contracts. Under many of WD Services’ contracts, we invest significant sums of money in personnel, leased office space, purchased or developed technology, and other costs, and generally incur these costs prior to commencing services and receiving payments. This results in significant variability in financial performanceincome and cash flows ~~between quarters and for comparative periods. It is expected that future contracts will be structured~~do not normally fluctuate as a result of seasonal variations in ~~a similar fashion. In addition, under~~ the majority of WD Services’ contracts, the Company relies on its customers, which include government agencies, to provide referrals, for whom the Company can provide services and earn revenue. The timing and magnitude of referrals can fluctuate significantly, leading to volatility in revenue.business.

Liquidity and capital resources

Short-term capital requirements consist primarily of recurring operating expenses, ~~and new~~ contract start-up costs ~~including workforce restructuring costs.~~on new revenue contracts and costs associated with our strategic initiatives. We expect to meet ~~any~~our cash requirements through available cash on hand, cash generated from ~~our operating segments,~~operations, net of capital expenditures, and ~~borrowing capacity~~occasional borrowings under our Credit ~~Facility (as defined below)~~Facility. For information regarding our long-term capital requirements, see below under the caption "Liquidity".

Cash ~~flow from~~used in operating activities during the nine months ended September 30, 2023 was our primary source of cash during YTD 2017. Additionally, YTD 2017 included $15.8 million in proceeds from the sale of our equity investment in Mission Providence which is included in cash provided by investing activities.$57.3 million. Our balance of cash and cash equivalents, including restricted cash, was ~~$92.2~~$8.6 million and ~~$72.3~~$15.0 million at September 30, ~~2017~~2023 and December 31, ~~2016, respectively, including $33.8 million and $21.4 million held in foreign countries,~~2022, respectively. The September 30, 2017 foreign cash balance includes the proceeds from the sale of Mission Providence. Such cash held in foreign countries is generally used to fund foreign operations, although it may also be used to repay intercompany indebtedness existing between Providence and its foreign subsidiaries.

We had restricted cash of ~~$7.1~~$0.5 million and ~~$14.1~~$0.5 million at September 30, ~~2017~~2023 and December 31, ~~2016, respectively, primarily related to contractual obligations and activities of our captive insurance subsidiary. These restricted~~2022, respectively. Restricted cash amounts are not included in our balance of cash and cash ~~equivalents. At September 30, 2017~~equivalents in the unaudited condensed consolidated balance sheets, although they are included in the cash, cash equivalents and ~~December 31, 2016, we had no amounts outstanding under our Credit Facility.~~restricted cash balance on the accompanying unaudited condensed consolidated statements of cash flows.

We may, from time to time, access capital markets to raise equity or debt financing for various business reasons, including ~~acquisitions. We may also raise debt financing to fund future~~acquisitions, repurchases of common stock, investments in our ~~common stock.~~business and possible refinancing activity. The timing,

term, size, and pricing of any such financing will depend on investor interest and market conditions, and there can be no assurance that we will be able to obtain any such ~~financing. On November 2, 2017,~~financing on terms acceptable to us at the Company’s Board of Directors approved the extension of the Company’s existing stock repurchase program, authorizing the Company to engage in a common stock repurchase program to repurchase up to $69.6 million (the amount remaining from the $100.0 million repurchase amount authorized in 2016) in aggregate value of the Company’s common stock through December 31, 2018.time or at all.

The cash flow statement for all periods presented includes both continuing and discontinued operations. Discontinued operations for YTD 2016 includes the activity of our Human Services and HA Services segments. Income from discontinued operations totaled $0.3 million for YTD 2016. Significant non-cash items of our discontinued operations in YTD 2016 included $3.7 million of depreciation expense and $17.5 million of amortization expense. Our discontinued operations also purchased property and equipment totaling $8.0 million during YTD 2016.

YTD ~~2017~~2023 cash flows compared to YTD ~~2016~~2022

~~Investing activities.~~ ~~Net cash provided by investing activities of $4.9 million in YTD 2017 increased by $40.0~~$73.2 million as compared to YTD ~~2016. The increase~~2022, primarily as a result of acquisition activity during YTD 2022 related to an acquisition made under our RPM segment.

~~Financing activities.~~ ~~Net~~ cash used in financing activities of ~~$22.3~~$1.8 million infor YTD ~~2017 decreased $9.9~~2022. The change of $83.9 million aswas primarily a result of proceeds from our short-term borrowing on our Credit Facility of $83.0 million during YTD 2023, compared to ~~YTD 2016. During YTD 2017, we repurchased $34.5 million less of our common stock than in YTD 2016. Partially offsetting this decrease in cash outflows was a decrease in net~~no proceeds from debt or other short-term borrowings during YTD ~~2017 as compared to YTD 2016 of $20.3 million as well as a decrease in proceeds from common stock issued pursuant to stock option exercises of $2.6 million.~~2022.

Obligations and commitments

Liquidity measures our ability to meet current and future cash flow needs on a timely basis and at a reasonable cost. We manage our liquidity position to meet our daily cash flow needs, while maintaining an ~~option~~appropriate balance between assets and liabilities to ~~request an increase~~meet the return on investment objectives of our shareholders. Our liquidity position is supported by management of liquid assets and liabilities and access to alternative sources of funds. Liquid assets include cash of $8.1 million and accounts receivable, contract receivables, and other receivables of $340.8 million. Liquid liabilities which totaled $691.7 million at period end as detailed in the ~~amount~~table below, included $68.5 million in guarantees and letters of credit that are not expected to be paid in cash in the ~~revolving credit facility from time to time (on substantially the same terms as apply to the existing facilities) in an aggregate amount~~next 12 months. Other sources of liquidity include amounts currently available under our Credit Facility of up to ~~$75.0~~approximately $164.0 million with either additional commitments from lenders under the Credit Agreement at such time or new commitments from financial institutions acceptable to the administrative agent in its reasonable discretion, so long as no default or event of default exists at the time of any such increase. The Company may not be able to access additional funds under this increase option as no lender is obligated to participate in any such increase under the Credit Facility. The Credit Facility matures on August 2, 2018.

Interest on the outstanding principal amount of the loans accrues, at the Company’s election, at a per annum rate equal to LIBOR, plus an applicable margin, or the base rate as defined in the agreement plus an applicable margin. The applicable margin ranges from 2.25% to 3.25% in the case of LIBOR loans and 1.25% to 2.25% in the case of the base rate loans, in each case, based on the Company’s consolidated leverage ratio as defined in the Credit Agreement. Interest on the loans is payable quarterly in arrears. In addition, the Company is obligated to pay a quarterly commitment fee based on a percentage of the unused portion of each lender’s commitment under the Credit Facility and quarterly letter of credit fees based on a percentage of the maximum amount available to be drawn under each outstanding letter of credit. The commitment fee and letter of credit fee range from 0.25% to 0.50% and 2.25% to 3.25%, respectively, in each case, based on the Company’s consolidated leverage ratio.

The Company’s obligations under the Credit Facility are guaranteed by all of the Company’s present and future domestic subsidiaries, excluding certain domestic subsidiaries which include the Company’s insurance captives. The Company’s obligations under, and each guarantor’s obligations under its guaranty of, the Credit Facility are secured by a first priority lien on substantially all of the Company’s respective assets, including a pledge of 100% of the issued and outstanding stock of the Company’s domestic subsidiaries, excluding the Company’s insurance captives, and 65% of the issued and outstanding stock of the Company’s first tier foreign subsidiaries.

The Credit Agreement contains customary affirmative and negative covenants and events of default. The negative covenants include restrictions on the Company’s ability to, among other things, incur additional indebtedness, create liens, make investments, give guarantees, pay dividends, sell assets, and merge and consolidate. The Company is subject to financial covenants, including consolidated net leverage and consolidated interest coverage covenants. The Company was in compliance with all covenants as of September 30, ~~2017.~~2023 based on our total net debt leverage ratio covenant of 5.25:1.00, and expected future cash generated from operations.

~~Preferred Stock.~~ ~~Following (i)~~

In the ~~completion~~ordinary course of ~~a rights offering~~business we have entered into contractual obligations and have made other commitments to make future payments. Our short-term and long-term liquidity requirements are primarily to fund on-going operations. These liquidity requirements are met primarily through cash flow from operations, debt financing, and our Credit Facility. For additional information regarding our operating, investing and financing cash flows, see “Condensed Consolidated Financial Statements— Condensed Consolidated Statements of Cash Flows,” included in ~~February 2015, under which certain holders~~Part I, Item I of ~~our Common Stock exercised subscription rights~~this report.

The Company has cash requirements of $691.7 million due in one year or less in addition to purchase Preferred Stock, and (ii) the purchase of Preferred Stock by certain of Coliseum Capital Partners, L.P., Coliseum Capital Partners II, L.P., Coliseum Capital Co-Invest, L.P. and Blackwell Partners, LLC (collectively, the “Standby Purchasers”), pursuant to the Standby Purchase Agreement between the Standby Purchasers and the Company, the Company issued 805,000 shares of Preferred Stock, of which 803,232 shares are outstanding$1,245.2 million due in more than one year as of September 30, ~~2017. For~~2023. The following is a summary of our future cash requirements for the next twelve months and the period extending beyond twelve months as of September 30, 2023 (in thousands):


	At September 30, 2023
			Less than		Greater than
	Total		1 Year		1 Year
Senior Unsecured Notes(1)	$	1,000,000	$	—	$	1,000,000
Interest(1)	213,996		56,847		157,149
Contracts payable(2)	133,576		133,576		—
Transportation costs(3)	102,974		102,974		—
Deferred tax liabilities(4)	42,001		—		42,001
Operating leases(5)	42,299		8,902		33,397
Guarantees(6)	29,666		29,391		275
Letters of credit(6)	39,074		39,074		—
Purchased service commitment(7)	61,875		49,500		12,375
Short-term borrowings(8)	83,000		83,000		—
Other current cash obligations(9)	188,398		188,398		—
Total	$	1,936,859	$	691,662	$	1,245,197

(1)See Note 9 of the Notes to the unaudited condensed consolidated financial statements included in Part I, Item 1, “Financial Statements” for further ~~information regarding these transactions, see~~detail of our Senior Unsecured Notes and the timing of expected future payments. Interest payments on our Senior Unsecured Notes are typically paid semi-annually in arrears and have been calculated at the rates fixed as of September 30, 2023. Interest payments on our short-term borrowings have been calculated by taking the expected borrowing on the Credit Facility for the next year at the interest rate of 9.8%.

(2)See Note 4 of the Notes to the unaudited condensed consolidated financial statements included in Part I, Item ~~7. “Management’s Discussion~~1, “Financial Statements” for further detail of our contracts payable.

(3)See Note 1 of the Notes to the consolidated financial statements included in Part II, Item 8, “Financial Statements and ~~Analysis~~Supplementary Data” of ~~Financial Condition and Results of Operations – Liquidity and capital resources – Obligations and commitments – Rights Offering” in the Company’s Annual Report on~~our Form 10-K for the year ended December 31, ~~2016. We may pay a noncumulative cash dividend~~2022 filed on ~~each share of Preferred Stock, when, as and if declared by a committee~~March 7, 2023 for further detail of our ~~Board~~accrued transportation cost.

(4)Deferred income taxes reflect the net tax effects of ~~Directors (“Board”), at~~temporary differences between the ~~rate~~carrying amounts of ~~5.5% per annum on~~assets and liabilities for financial reporting purposes and the ~~liquidation preference then~~amounts used for income tax purposes.

(5)The operating leases are for office space. Certain leases contain periodic rent escalation adjustments and renewal options. See Note 17 of the Notes to the consolidated financial statements included in ~~effect. On or before the third business day immediately preceding each fiscal quarter, we determine our intention whether or not to pay a cash dividend with respect to that ensuing quarter~~Part II, Item 8, “Financial Statements and ~~give notice~~Supplementary Data” of our ~~intention~~Form 10-K for the year ended December 31, 2022 filed on March 7, 2023 for further detail of our operating leases.

(6)Letters of credit (“LOCs”) are guarantees of potential payments to ~~each holder~~third parties under certain conditions. Guarantees include surety bonds we provide to certain customers to protect against potential non-delivery of ~~Preferred Stock as soon as practicable thereafter.~~our non-emergency transportation services. Our LOCs shown in the table were provided by our Credit Facility and reduced our availability under the related Credit Agreement. The surety bonds and LOC amounts in the above table represent the amount of commitment expiration per period.

In(7)The purchased service commitment includes the ~~event~~maximum penalty we would incur if we do not ~~declare and pay a cash dividend,~~meet our minimum volume commitment over the ~~liquidation preference will be increased to an amount equal~~remaining term of the agreement under certain contracts. See Note 19 of the Notes to the ~~liquidation preference~~consolidated financial statements included in ~~effect at~~Part II, Item 8, “Financial Statements and Supplementary Data” of our Form 10-K for the ~~start~~year ended December 31, 2022 filed on March 7, 2023 for further detail of our purchased service commitment.

(8)Short-term borrowings shown in the table were provided by our Credit Facility and reduced our availability under the related Credit Agreement. See Note 9 of the applicable dividend period, plus an amount equal to such then applicable liquidation preference multiplied by 8.5% per annum, computed on the basis of a 365-day year and the actual number of days elapsed from the start of the applicable dividend periodNotes to the ~~applicable date of determination.~~

~~Cash dividends are payable quarterly~~unaudited condensed consolidated financial statements included in ~~arrears on January~~Part I, Item 1, April 1, July 1 and October 1 of each year, and, if declared, will begin to accrue on the first day of the applicable dividend period. Paid in kind (“PIK”) dividends, if applicable, will accrue and be cumulative on the same schedule as set forth above“Financial Statements” for cash dividends and will also be compounded at the applicable annual rate on each applicable subsequent dividend date. PIK dividends are paid upon the occurrence of a liquidation event, conversion or redemption in accordance with the terms of the Preferred Stock. Cash dividends were declared for the nine months ended September 30, 2017 and totaled $3.3 million.

~~Reinsurance and Self-Funded Insurance Programs~~

~~We historically reinsured a substantial portion~~further detail of our ~~automobile, general and professional liability and workers’ compensation costs under reinsurance programs through~~Credit Facility.

(9)These include other current liabilities reflected in our wholly-owned captive insurance subsidiary, Social Services Providers Captive Insurance Company, or SPCIC. As of May 16, 2017, SPCIC did not renew the expiring reinsurance policies. SPCIC will continue to resolve claims under the historical policy years.

At September 30, 2017, the cumulative reserve for expected losses since inception of these historical automobile, general and professional liability and workers’ compensation reinsurance programs was $1.8 million, $0.8 million and $5.7 million, respectively. Based on an independent actuarial report, our expected losses related to workers’ compensation, automobile and general and professional liability in excess of our liability under our associated historical reinsurance programs at September 30, 2017 was $6.1 million. We recorded a corresponding receivable from third-party insurers and liability at September 30, 2017 for these expected losses, which would be paid by third-party insurers to the extent losses are incurred.

Further, SPCIC had restricted cash of $6.8 million and $13.8 million at September 30, 2017 and December 31, 2016, respectively, which was restricted to secure the reinsured claims losses of SPCIC under the historical automobile, general and professional liability and workers’ compensation reinsurance programs.

~~Health Insurance~~

We offer our NET Services’, certain WD Services’ and corporate employees an option to participate in a self-funded health insurance program. The liability for the self-funded health plan of $2.4 million and $3.0 million as of September 30, 2017 and December 31, 2016, respectively, was recorded in “Reinsurance liability and related reserve” in ourunaudited condensed consolidated balance ~~sheets.~~sheets as of September 30, 2023, including accounts payable and accrued expenses as detailed at Note 8 to the unaudited condensed consolidated financial statements included in Part I, Item 1, “Financial Statements”.

Our primary sources of funding include operating cash flows and access to capital markets. There are statutory, regulatory, and debt covenant limitations that affect our ability to access the capital market for funds. Management believes that such limitations will not impact our ability to meet our ongoing short-term cash obligations. Management continuously monitors our liquidity position and adjustments are made to the balance between sources and uses of funds as deemed appropriate. Our management is not aware of any events that are reasonably likely to have a material adverse effect on our liquidity, capital resources, or operations. In addition, our management is not aware of any regulatory recommendations regarding liquidity, which if implemented, would have a material adverse effect on us.

Off-Balance Sheet Arrangements

There have been no material changes to the Off-Balance Sheet Arrangements discussion previously disclosed in our audited consolidated financial statements contained in ~~the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.~~

~~Forward-Looking Statements~~

This Quarterly Report on Form 10-Q contains certain statements that may be deemed “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements related to the Company’s strategies or expectations about revenues, liabilities, results of operations, cash flows, ability to fund operations, profitability, ability to meet financial covenants, contracts or market opportunities. The Company may also make forward-looking statements in other reports filed with the Securities and Exchange Commission (the “SEC”), in materials delivered to stockholders and in press releases. In addition, the Company’s representatives may from time to time make oral forward-looking statements. In certain cases, you may identify forward looking-statements by words such as “may”, “will”, “should”, “could”, “expect”, “plan”, “project”, “intend”, “anticipate”, “believe”, “seek”, “estimate”, “predict”, “potential”, “target”, “forecast”, “likely”, the negative of such terms or comparable terminology. In addition, statements that are not historical statements of fact should also be considered forward-looking statements. These forward-looking statements are based on the Company’s current expectations, assumptions, estimates and projections about its business and industry, and involve risks, uncertainties and other factors that may cause actual events to be materially different from those expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2016 and our other filings with the SEC.~~2022.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. The Company is under no obligation to (and expressly disclaims any such obligation to) update any of the information in any forward-looking statement if such forward-looking statement later turns out to be inaccurate, whether as a result of new information, future events or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As mainly related to our Credit Facility, which has variable interest rates that may increase. We had $83.0 million of short-term borrowings outstanding on the Credit Facility and $39.1 million of outstanding letters of credit under the Credit Facility at September 30, ~~2017, we conducted business in eleven countries outside~~2023. Interest rates on the ~~U.S. As~~outstanding principal amount of the Credit Facility vary and accrue at a ~~result, our cash flows~~per annum rate equal to the Alternate Base Rate, the Adjusted Term SOFR Rate, the Adjusted Daily Simple SOFR Rate, the Adjusted EURIBOR Rate or the Adjusted Daily Simple SONIA Rate, as applicable and earnings are subject to fluctuations due to changes in foreign currency exchange rates. We do not currently hedge against the possible impact of currency fluctuations. During YTD 2017 we generated $217.4 million of our net operating revenues from operations outside the U.S. As we expand further into international markets, we expect the risk from foreign currency exchange rates to increase.

~~A 10% adverse change~~each as defined in the ~~foreign currency exchange~~Credit Agreement, in each case, plus an applicable margin. We completed an interest rate ~~from British Pounds to U.S. dollars~~risk sensitivity analysis with the assumption that the short-term borrowing amount that was outstanding as of September 30, 2023 was outstanding for the fiscal year with an assumed one-percentage point increase in interest rates. Based on this analysis, the one-percentage point increase would have ~~a $14.4~~an approximate $0.8 million negative impact on ~~consolidated revenue and a negligible impact on net income. A 10% adverse change in other foreign currency exchange rates would not have a significant impact on~~ our ~~financial results.~~pre-tax earnings.

~~We assess the significance of foreign currency risk on a periodic basis and may implement strategies to manage such risk as we deem appropriate.~~

Item 4. Controls and Procedures.

~~The principal executive and financial officers also conducted an evaluation of whether any changes in the Company’s~~ internal control over financial reporting ~~occurred during~~

The Company is focused on projects that address processes and technologies to integrate each of the business segments into One ModivCare and standardize our control environment. Given the nature and complexity of the integration, management expects that the test of operating effectiveness of remediation will extend into 2024 for the PCS segment. The material weakness will not be considered remediated until the remediation plan has been implemented and there has been appropriate time for us to conclude through testing that the controls are ~~reasonably likely~~designed and operating effectively. Management will continue to ~~materially affect such control. Such officers have concluded that no such changes have occurred.~~monitor the progress of these efforts to ensure remediation.

Because of its inherent limitations, internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation and presentation. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. The Company conducts periodic evaluations of its internal controls to enhance, where necessary, its procedures and controls.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

~~On September 28, 2017, the Court approved a proposed settlement agreement among the parties~~information concerning other potential contingent liabilities matters that ~~provides for a settlement amount of $10.0 million less plaintiff’s legal fees and expenses (the “Settlement Amount”), with 75% of the Settlement Amount to be paid~~do not rise to the ~~Company and 25%~~level of ~~the Settlement Amount to be paid to holders~~materiality for purposes of the Company’s common stock other than certain excluded parties. The Company expects to receive a payment of approximately $5.0 million. As this amount is considered a gain contingency, the Company has not recorded a receivable for this amount as of September 30, 2017.disclosure hereunder.

Item 1A. Risk Factors.

~~There~~The risks described under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “Annual Report”) could materially and adversely affect our business, financial condition, and results of operations, and could cause the trading price of our common stock to decline. The discussion of the risks included under that caption in our Annual Report remains current in all material respects, and there have been no material changes from the risk factors disclosed in the ~~Company’s~~ Annual ~~Report on Form 10-K for the year ended December 31, 2016.~~Report. The risk factors that we have discussed do not identify all risks that we face; our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations. Due to risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

~~Issuer Purchases of Equity Securities~~None.

~~The following table provides information with respect to common stock repurchased by us during the three months ended September 30, 2017:~~

On November 2, 2017, the Company’s Board of Directors approved the extension of the Company’s existing stock repurchase program, authorizing the Company to engage in a common stock repurchase program to repurchase up to $69.6 million (the amount remaining from the $100.0 million repurchase amount authorized in 2016) in aggregate value of the Company’s common stock through December 31, 2018. Purchases under the common stock repurchase program may be made from time-to-time through a combination of open market repurchases (including Rule 10b5-1 plans), privately negotiated transactions, and accelerated share repurchase transactions, at the discretion of the Company’s officers, and as permitted by securities laws, covenants under existing bank agreements, and other legal requirements.

We have not paid any cash dividends on our common stock and currently do not expect to pay dividends on our common stock. In addition, our ability to pay dividends on our common stock is limited by the terms of our Credit Agreement and our preferred stock. The payment of future cash dividends, if any, will be reviewed periodically by the Board and will depend upon, among other things, our financial condition, funds from operations, the level of our capital and development expenditures, any restrictions imposed by present or future debt or equity instruments, and changes in federal tax policies, if any.

Item 3. Defaults Upon Senior Securities.

Item 4. Mine Safety Disclosures.

Item 5. Other Information.


*		Filed herewith.
**		Furnished herewith.


*	~~Filed herewith.~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

~~James M. Lindstrom~~L. Heath Sampson

Chief ExecutiveOfficer ~~and Director~~

~~David C. Shackelton~~Barbara Gutierrez

Chief Financial Officer


Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, $0.001 par value per share	MODV	The NASDAQ Global Select Market



	September 30, 2017			December 31, 2016
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	92,178		$	72,262
Accounts receivable, net of allowance of $5,765 in 2017 and $5,901 in 2016	175,162			162,115
Other receivables	5,555			12,639
Prepaid expenses and other	39,083			37,895
Restricted cash	1,198			3,192
Total current assets	313,176			288,103
Property and equipment, net	48,191			46,220
Goodwill	121,555			119,624
Intangible assets, net	45,750			49,124
Equity investments	157,067			161,363
Other assets	12,911			8,397
Restricted cash, less current portion	5,902			10,938
Deferred tax asset	4,436			1,510
Total assets	$	708,988		$	685,279
Liabilities, redeemable convertible preferred stock and stockholders' equity
Current liabilities:
Current portion of long-term obligations	$	1,528		$	1,721
Accounts payable	19,921			22,177
Accrued expenses	103,397			102,381
Accrued transportation costs	101,195			72,356
Deferred revenue	17,421			20,522
Reinsurance and related liability reserves	4,881			8,639
Total current liabilities	248,343			227,796
Long-term obligations, less current portion	566			1,890
Other long-term liabilities	23,968			22,380
Deferred tax liabilities	54,363			57,973
Total liabilities	327,240			310,039
Commitments and contingencies (Note 11)
Redeemable convertible preferred stock
Convertible preferred stock, net: Authorized 10,000,000 shares; $0.001 par value; 803,232 and 803,398 issued and outstanding; 5.5%/8.5% dividend rate	77,549			77,565
Stockholders' equity
Common stock: Authorized 40,000,000 shares; $0.001 par value; 17,446,673 and 17,315,661 issued and outstanding (including treasury shares)	17			17
Additional paid-in capital	310,017			302,010
Retained earnings	167,004			156,718
Accumulated other comprehensive loss, net of tax	(26,331		)	(33,449		)
Treasury shares, at cost, 3,944,171 and 3,478,676 shares	(144,201		)	(125,201		)
Total Providence stockholders' equity	306,506			300,095
Noncontrolling interest	(2,307		)	(2,420		)
Total stockholders' equity	304,199			297,675
Total liabilities, redeemable convertible preferred stock and stockholders' equity	$	708,988		$	685,279



	September 30, 2017		December 31, 2016
Current assets	$	50,015	$	28,589
Long-term assets	598,842		614,841
Current liabilities	39,273		25,791
Long-term liabilities	270,816		281,348



	Three months ended September 30, 2017
Revenue	$	58,639
Operating income	3,159
Net loss	(537		)



	Nine months ended September 30, 2017
Revenue	$	175,346
Operating income	10,109
Net loss	(775		)



	December 31, 2016
Current assets	$	4,640
Long-term assets	10,473
Current liabilities	12,844
Long-term liabilities	1,655



	September 30, 2017		December 31, 2016
Accrued compensation	$	24,058	$	23,050
NET Services accrued contract payments	26,504		32,836
Accrued settlement	15,000		6,000
Income taxes payable	—		372
Other	37,835		40,123
Total accrued expenses	$	103,397	$	102,381



	January 1, 2017		Costs Incurred			Cash Payments			Foreign Exchange Rate Adjustments		September 30, 2017

Ingeus Futures' Program	$	2,486	$	1,186		$	(3,086	)	$	158	$	744
Offender Rehabilitation Program	1,380		(40		)	(1,357		)	17		—
UK Restructuring Program	50		(29		)	—			3		24
Total	$	3,916	$	1,117		$	(4,443	)	$	178	$	768



	January 1, 2016		Costs Incurred		Cash Payments			Foreign Exchange Rate Adjustments			September 30, 2016

Offender Rehabilitation Program	$	6,538	$	4,204	$	(6,075	)	$	(906	)	$	3,761
UK Restructuring Program	2,059		537		(2,379		)	(103		)	114
Total	$	8,597	$	4,741	$	(8,454	)	$	(1,009	)	$	3,875



	Three months ended September 30, 2017								Nine months ended September 30, 2017
	Human Services Segment			HA Services Segment		Total Discontinued Operations			Human Services Segment			HA Services Segment		Total Discontinued Operations

Operating expenses:
General and administrative expense	$	26		$	—	$	26		$	9,622		$	—	$	9,622
Total operating expenses	26			—		26			9,622			—		9,622
Loss from discontinued operations before income taxes	(26		)	—		(26		)	(9,622		)	—		(9,622		)
Income tax benefit	10			—		10			3,622			—		3,622
Discontinued operations, net of tax	$	(16	)	$	—	$	(16	)	$	(6,000	)	$	—	$	(6,000	)



	Three months ended September 30, 2016									Nine months ended September 30, 2016
	Human Services Segment			HA Services Segment			Total Discontinued Operations			Human Services Segment			HA Services Segment			Total Discontinued Operations

Service revenue, net	$	—		$	52,557		$	52,557		$	—		$	155,421		$	155,421

Operating expenses:
Service expense	—			38,703			38,703			—			113,455			113,455
General and administrative expense	7,463			1,505			8,968			7,463			2,823			10,286
Depreciation and amortization	—			5,359			5,359			—			21,121			21,121
Total operating expenses	7,463			45,567			53,030			7,463			137,399			144,862
Operating income (loss)	(7,463		)	6,990			(473		)	(7,463		)	18,022			10,559

Other expenses:
Interest expense, net	—			3,134			3,134			—			9,304			9,304
Income (loss) from discontinued operations before income taxes	(7,463		)	3,856			(3,607		)	(7,463		)	8,718			1,255
Income tax benefit (provision)	2,428			(1,612		)	816			2,428			(3,351		)	(923		)
Discontinued operations, net of tax	$	(5,035	)	$	2,244		$	(2,791	)	$	(5,035	)	$	5,367		$	332



	Nine months ended September 30, 2016

Cash flows from discontinued operating activities:
Depreciation	$	3,661
Amortization	$	17,460

Cash flows from discontinued investing activities:
Purchase of property and equipment	$	8,020



	Three months ended September 30, 2017
	NET Services		WD Services			Matrix Investment			Corporate and Other			Total
Service revenue, net	$	324,824	$	84,693		$	—		$	—		$	409,517
Service expense	304,454		73,581			—			(3		)	378,032
General and administrative expense	2,899		6,980			—			8,750			18,629
Depreciation and amortization	3,286		3,166			—			95			6,547
Operating income (loss)	$	14,185	$	966		$	—		$	(8,842	)	$	6,309

Equity in net gain (loss) of investee	$	—	$	(459	)	$	(1	)	$	—		$	(460	)



Period	Total Number of Shares of Common Stock Purchased (1)	Average Price Paid per Share		Total Number of Shares of Common Stock Purchased as Part of Publicly Announced Plans or Program	Maximum Dollar Value of Shares of Common Stock that May Yet Be Purchased Under the Plans or Program (2)
Month 1:
July 1, 2017
to
July 31, 2017	47	$	50	—	$	69,624,167

Month 2:
August 1, 2017
to
August 31, 2017	115	$	51.54	—	$	69,624,167

Month 3:
September 1, 2017
to
September 30, 2017	—	$	—	—	$	69,624,167

Total	162			—


~~(1)~~	~~Includes shares repurchased from employees in connection with the settlement of income tax and related benefit withholding obligations arising from vesting of restricted stock grants.~~


~~(2)~~	On October 26, 2016, our Board authorized a new repurchase program, under which the Company may repurchase up to $100.0 million in aggregate value of the Company’s common stock during the twelve-month period following October 26, 2016. As of September 30, 2017, a total of 770,808 shares were purchased through this plan for $30.4 million, including commission payments.


Exhibit Number						Description


~~Exhibit~~ ~~Number~~						~~Description~~
3.1						Second Amended and Restated Certificate of Incorporation of the registrant, as filed with the Secretary of State of Delaware on December 9, 2011 (Incorporated by reference to Exhibit 3.1 to the registrant's annual report on Form 10-K filed with the SEC on March 1, 2021).

3.2						~~31.1~~Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the registrant, dated as of May 6, 2015 (Incorporated by reference to Exhibit 3.1 to the registrant's current report on Form 8-K filed with the SEC on May 7, 2015).*

3.3						Second Amendment to the Second Amended and Restated Certificate of Incorporation of the registrant, effective January 6, 2021 (Incorporated by reference to Exhibit 3.1 to the registrant's current report on Form 8-K filed with the SEC on January 6, 2021).

3.4						Third Amendment to the Second Amended and Restated Certificate of Incorporation of the registrant, effective June 13, 2023 (Incorporated by reference to Exhibit 3.1 to the registrant’s current report on Form 8-K filed with the SEC on June 15, 2023).

3.5						Amended and Restated Bylaws of the registrant, effective January 6, 2021 (Incorporated by reference to Exhibit 3.2 to the registrant’s current report on Form 8-K filed with the SEC on January 6, 2021).

3.6						Amendment to the Amended and Restated Bylaws of the registrant, effective June 13, 2023 (Incorporated by reference to Exhibit 3.2 to the registrant's current report on Form 8-K filed with the SEC on June 15, 2023).

4.1						Indenture for 5.875% Senior Notes Due 2025 dated as of November 4, 2020, between the registrant and The Bank of New York Mellon Trust Company, N.A., as trustee (Incorporated by reference to Exhibit 4.1 to the registrant’s current report on Form 8-K filed with the SEC on November 12, 2020).

4.2						Indenture for 5.000% Senior Notes Due 2029 dated as of August 24, 2021, between ModivCare Escrow Issuer, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (Incorporated by reference to Exhibit 4.1 to the registrant’s current report on Form 8-K filed with the SEC on August 24, 2021).

10.1*						O ffer Letter, dated July 31 , 2023 , by and between the registrant and Barbara Gutierrez .

31.1*						Certification pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 of the Chief Executive Officer.

~~31.2~~* 31.2*						Certification pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 of the Chief Financial Officer.

~~32.1~~32.1**						Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Chief Executive Officer.

~~32.2~~32.2**						Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Chief Financial Officer.

~~101. INS~~101.INS*						~~XBRL~~Inline XBR Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

~~101.SCH~~101.SCH*						Inline XBRL Schema Document

~~101.CAL~~101.CAL*						Inline XBRL Calculation Linkbase Document

~~101.LAB~~101.LAB*						Inline XBRL Label Linkbase Document

~~101.PRE~~101.PRE*						Inline XBRL Presentation Linkbase Document

~~101.DEF~~101.DEF*						Inline XBRL Definition Linkbase Document

104*						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


			ModivCare Inc.

Date: November 2, 2023			~~THE PROVIDENCE SERVICE CORPORATION~~By:	/s/ L. Heath Sampson

~~Date: November 8, 2017~~	~~By:~~	~~/s/ James M. Lindstrom~~
		~~James M. Lindstrom~~L. Heath Sampson Chief ExecutiveOfficer ~~and Director~~
				(Principal Executive Officer)

Date: November ~~8, 2017~~2, 2023			By:	/s/ ~~David C. Shackelton~~Barbara Gutierrez
				~~David C. Shackelton~~Barbara Gutierrez Chief Financial Officer
				(Principal Financial Officer)