Exhibit 99.1
Providence Service Corporation ReportsSecond Quarter 2016 Results
| | ● | Revenue of $450.6 million |
| | ● | Income from continuing operations, net of tax, of $4.0 million; diluted EPS of $0.21 |
| | ● | Adjusted Net Income (non-GAAP) of $13.1 million; Adjusted EPS (non-GAAP) of $0.70 |
| | ● | Adjusted EBITDA (non-GAAP) of $30.7 million |
STAMFORD, CT–August 1, 2016– The Providence Service Corporation (the “Company”) (Nasdaq: PRSC), a holding company whose subsidiaries provide critical healthcare and workforce development services, today reported financial results for the second quarter and six months ended June 30, 2016.
"I am pleased to announce another quarter of solid performance, particularly within US Healthcare Services where both transportation revenue and assessment margins exceeded our expectations," said James Lindstrom, President and Chief Executive Officer. "Providence’s underlying fundamentals remain strong, supplemented by our holding company approach and multiple value enhancement initiatives.”
SecondQuarter 2016 Results
For the second quarter of 2016, the Company reported consolidated revenue of $450.6 million, an increase of 7.7% from $418.2 million in the second quarter of 2015.
Income from continuing operations, net of tax, in the second quarter of 2016 was $4.0 million, or $0.21 per diluted common share, compared to $4.8 million, or $0.16 per diluted common share, in the second quarter of 2015. Adjusted Net Income (non-GAAP) in the second quarter of 2016 was $13.1 million, or $0.70 per diluted common share, compared to $14.2 million, or $0.67 per diluted common share, in the second quarter of 2015.
Adjusted EBITDA (non-GAAP) in the second quarter of 2016 was $30.7 million, compared to $31.6 million in the second quarter of 2015.
During the second quarter of 2016, the Company repurchased 273,169 common shares under its share repurchase program for $12.9 million, or for an average price of $47.36 per share.
Year to Date 2016 Results
For the first six months of 2016, the Company reported consolidated revenue of $883.3 million, an increase of 5.4% from $838.1 million in the comparable period of 2015.
Income from continuing operations, net of tax, for the first six months of 2016 was $6.1 million, or $0.27 per diluted common share, compared to $10.7 million, or $0.45 per diluted common share, in the comparable period of 2015. Adjusted Net Income (non-GAAP) for the first half of 2016 was $22.5 million, or $1.19 per diluted common share, compared to $29.0 million, or $1.48 per diluted common share, in the same period last year.
Adjusted EBITDA (non-GAAP) for the first half of 2016 was $56.0 million, compared to $64.6 million for the first half of 2015.
During the first half of 2016, the Company repurchased 708,904 common shares for $32.4 million, or for an average price of $45.73 per share.
A reconciliation of Adjusted EBITDA and Adjusted Net Income to income from continuing operations, net of tax, and the calculation of Adjusted EPS are presented below.
Segment Results
For analysis purposes, we provide revenue, expenses, operating income (loss), income (loss) from continuing operations, net of taxes, and Adjusted EBITDA (non-GAAP) on a segment basis. Segment results include revenue and expenses incurred by the segment, as well as an allocation of direct expenses incurred by Corporate on behalf of the segment. Indirect expenses, including unallocated corporate functions and expenses, such as executive, accounting, finance, human resources, information technology and legal, as well as the results of our captive insurance company and elimination entries recorded in consolidation are reflected in Corporate and Other.
US Healthcare Services
NET Services
NET Services revenue was $309.2 million for the second quarter of 2016, an increase of 14.2% from $270.7 million in the second quarter of 2015. Operating income was $17.8 million, or 5.7% of revenue, in the second quarter of 2016, compared to $18.9 million, or 7.0% of revenue, in the second quarter of 2015. Adjusted EBITDA (non-GAAP) was $20.7 million, or 6.7% of revenue, in the second quarter of 2016, compared to $21.2 million, or 7.8% of revenue, in the second quarter of 2015.
NET Services revenue was $600.1 million for the first half of 2016, an increase of 14.2% from $525.5 million in the first half of 2015. Operating income was $36.1 million, or 6.0% of revenue, for the first half of 2016, compared to $39.6 million, or 7.5% of revenue, for the first half of 2015. Adjusted EBITDA (non-GAAP) was $41.9 million, or 7.0% of revenue, for the first half of 2016, compared to $44.2 million, or 8.4% of revenue, for the first half of 2015.
The year-over-year increase in NET Services revenue in the second quarter of 2016 was primarily due to new state and managed care organization contracts in multiple geographies as well as increased membership under certain existing contracts. Adjusted EBITDA (non-GAAP) as a percentage of revenue declined as a result of increased member utilization and additional compensation expense related to long-term incentive plans tied to value creation.
HA Services
HA Services revenue was $52.3 million in the second quarter of 2016, a decrease of 5.7% compared to the second quarter of 2015. Operating income was $6.7 million, or 12.8% of revenue, in the second quarter of 2016, compared to $6.3 million, or 11.3% of revenue, in the second quarter of 2015. Adjusted EBITDA (non-GAAP) was $14.6 million, or 28.0% of revenue, in the second quarter of 2016, compared to $13.5 million, or 24.3% of revenue, in the second quarter of 2015.
HA Services revenue was $102.9 million for the first half of 2016, a decrease of 8.8% compared to the first half of 2015. Operating income was $11.0 million, or 10.7% of revenue, for the first half of 2016, compared to $12.8 million, or 11.3% of revenue, for the first half of 2015. Adjusted EBITDA (non-GAAP) was $26.8 million, or 26.0% of revenue, for the first half of 2016, compared to $27.1 million, or 24.1% of revenue, for the first half of 2015.
The decline in HA Services revenue in the second quarter of 2016 compared to the prior year period was due to a decline in the average price per assessment, which was largely the result of a change in customer mix in the second quarter of 2016 compared to the second quarter of 2015. In 2015, pricing was highest in the second quarter, which will not be the case in 2016. Adjusted EBITDA (non-GAAP) as a percentage of revenue increased due to management’s continued success in driving efficiencies as well as a reduction in expense due to forfeited long-term awards, which have been reallocated to current employees.
Global Workforce Development
WD Services
WD Services revenue for the second quarter of 2016 was $89.3 million, a decrease of 3.1% compared to the second quarter of 2015. Excluding the effects of changes in currency exchange rates, revenue increased 1.6% in the second quarter of 2016 versus the second quarter of 2015. WD Services incurred an operating loss of $5.2 million in the second quarter of 2016, compared to an operating loss of $2.4 million in the second quarter of 2015. The operating loss in the second quarter of 2016 includes $3.7 million of redundancy costs related to continued service delivery redesigns, primarily related to the segment’s offender rehabilitation program.
Prior to the impact of the Mission Providence joint venture, WD Services Adjusted EBITDA (non-GAAP) was $2.3 million, or 2.6% of revenue, in the second quarter of 2016 compared to $4.7 million, or 5.1% of revenue, in the second quarter of 2015. The Adjusted EBITDA (non-GAAP) associated with Mission Providence was negative $1.2 million in the second quarter of 2016 and negative $1.3 million in the second quarter of 2015.
Revenue for the first half of 2016 was $180.3 million, a decrease of 9.7% compared to the first half of 2015. Excluding the effects of changes in currency exchange rates, revenue declined 5.2% in the first half of 2016 versus the first half of 2015. WD Services incurred an operating loss of $7.3 million for the first half of 2016, compared to operating income of $0.4 million for the first half of 2015. The operating loss for the first half of 2016 included $5.1 million of redundancy costs related to continued service delivery redesigns and the anticipated closure of the segment’s operations in Poland.
Prior to the impact of the Mission Providence joint venture, WD Services Adjusted EBITDA (non-GAAP) was $5.2 million, or 2.9% of revenue, for the first half of 2016 compared to $13.6 million, or 6.8% of revenue, for the first half of 2015. The Adjusted EBITDA (non-GAAP) associated with Mission Providence was negative $4.3 million for the first half of 2016 and negative $4.9 million for the first half of 2015.
The decline in Adjusted EBITDA (non-GAAP) at WD Services was primarily due to start-up costs related to the segment’s offender rehabilitation program in the United Kingdom and the operational underperformance of employability programs in France.
Corporate and Other
Corporate and Other incurred an operating loss of $5.8 million in the second quarter of 2016 compared to an operating loss of $7.6 million in the second quarter of 2015. Adjusted EBITDA (non-GAAP) was negative $5.8 million in the second quarter of 2016 compared to negative $6.5 million in the second quarter of 2015.
Corporate and Other incurred an operating loss of $13.8 million for the first half of 2016 compared to an operating loss of $16.9 million for the first half of 2015. Adjusted EBITDA (non-GAAP) was negative $13.6 million in the second quarter of 2016 compared to negative $15.6 million in the second quarter of 2015.
The improvement in Adjusted EBITDA (non-GAAP) in the second quarter of 2016 versus the prior year period was primarily due a reduction in professional fees and stock-based compensation expense.
Conference Call
Providence will hold a conference call at 8:00 a.m. EDT Tuesday, August 2, 2016 to discuss its financial results and corporate developments. Interested parties are invited to listen to the call live at http://investor.prscholdings.com or by dialing(844) 244-3865, or for international callers (518) 444-0681, and using the passcode 56389155. A replay of the teleconference will be available on http://investor.prscholdings.com. A replay will also be available until August 16, 2016 by dialing (855) 859-2056 or (404) 537-3406 and using passcode 56389155.
About Providence
The Providence Service Corporation is a holding company whose subsidiaries provide critical healthcare and workforce development services, comprised of non-emergency transportation services, workforce development services, legal offender rehabilitation services, health assessment services, and care management services in the United States and abroad. For more information, please visit prscholdings.com.
Non-GAAPFinancial Measures and Adjustments
In addition to the financial results prepared in accordance with US generally accepted accounting principles (GAAP), this press release includes EBITDA and Adjusted EBITDA for the Company and our operating segments and Adjusted Net Income and Adjusted EPS for the Company, which are financial measures that are not recognized under GAAP. EBITDA is defined as income (loss) from continuing operations, before: (1) interest expense, net, (2) provision (benefit) for income taxes and (3) depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before certain items, including restructuring and termination costs and foreign currency adjustments. Adjusted Net Income is defined as income from continuing operations, net of tax plus net loss attributable to noncontrolling interest and before: (1) certain items, including restructuring and termination costs, and foreign currency adjustments, (2) intangible amortization expense and (3) the income tax impact of such adjustments. Adjusted EPS is calculated as Adjusted Net Income less (as applicable): (1) dividends on convertible preferred stock, (2) accretion of convertible preferred stock discount and (3) income allocated to participating stockholders, divided by the diluted weighted-average number of common shares outstanding. We utilize these non-GAAP measurements, which exclude certain expenses, because we believe the timing of such expenses is unpredictable and not driven by our core operating results, and therefore render comparisons with prior periods as well as with other companies in our industry less meaningful. We believe such measures allow investors to gain a better understanding of the factors and trends affecting the ongoing cash earnings capabilities of our business, for which capital investments are made and debt is serviced.
Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because they are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies, and exclude expenses that may have a material impact on our reported financial results. The presentation of non-GAAP financial information is not meant to be considered in isolation from or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. We urge you to review the reconciliations of our non-GAAP financial measures to the comparable GAAP financial measures included below, and not to rely on any single financial measure to evaluate our business.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believe,” “demonstrate,” “expect,” “estimate,” “forecast,” “anticipate,” “should” and “likely” and similar expressions identify forward-looking statements. In addition, statements that are not historical should also be considered forward-looking statements. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of the date the statement was made. Such forward-looking statements are based on current expectations that involve a number of known and unknown risks, uncertainties and other factors which may cause actual events to be materially different from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, our continuing relationship with government entities and our ability to procure business from them, our ability to manage growing and changing operations, the implementation of the healthcare reform law, state budget changes and legislation and other risks detailed in Providence’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and subsequent filings. Providence is under no obligation to (and expressly disclaims any such obligation to) update any of the information in this press release if any forward-looking statement later turns out to be inaccurate whether as a result of new information, future events or otherwise.
Investor Relations Contact
Chris Brigleb – VP of Finance
(203) 816-6589
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Providence Service Corporation
Page 5
The Providence Service Corporation
Unaudited Condensed Consolidated Statements of Income
(in thousands except share and per share data)
| | | Three months ended June 30, | | | Six months ended June 30, | |
| | | 2016 | | | 2015 | | | 2016 | | | 2015 | |
| | | | | | | | | | | | | | | | | |
Service revenue, net | | $ | 450,632 | | | $ | 418,238 | | | $ | 883,282 | | | $ | 838,067 | |
| | | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | |
Service expense | | | 405,050 | | | | 371,616 | | | | 791,538 | | | | 738,153 | |
General and administrative expense | | | 17,373 | | | | 18,294 | | | | 36,546 | | | | 37,760 | |
Depreciation and amortization | | | 14,814 | | | | 13,191 | | | | 29,150 | | | | 26,244 | |
Total operating expenses | | | 437,237 | | | | 403,101 | | | | 857,234 | | | | 802,157 | |
Operating income | | | 13,395 | | | | 15,137 | | | | 26,048 | | | | 35,910 | |
| | | | | | | | | | | | | | | | | |
Other expenses: | | | | | | | | | | | | | | | | |
Interest expense, net | | | 3,436 | | | | 3,722 | | | | 7,071 | | | | 8,917 | |
Equity in net loss of investee | | | 1,459 | | | | 1,059 | | | | 4,176 | | | | 3,542 | |
Gain on foreign currency transactions | | | (775 | ) | | | (714 | ) | | | (849 | ) | | | (395 | ) |
Income from continuing operationsbefore income taxes | | | 9,275 | | | | 11,070 | | | | 15,650 | | | | 23,846 | |
Provision for income taxes | | | 5,280 | | | | 6,227 | | | | 9,527 | | | | 13,148 | |
Income from continuing operations, net of tax | | | 3,995 | | | | 4,843 | | | | 6,123 | | | | 10,698 | |
Discontinued operations, net of tax | | | - | | | | 1,732 | | | | - | | | | 2,126 | |
Net income | | | 3,995 | | | | 6,575 | | | | 6,123 | | | | 12,824 | |
Net loss attributable to noncontrolling interests | | | 628 | | | | 59 | | | | 735 | | | | 47 | |
Net income attributable to Providence | | $ | 4,623 | | | $ | 6,634 | | | $ | 6,858 | | | $ | 12,871 | |
| | | | | | | | | | | | | | | | | |
Net income available to commonstockholders | | $ | 3,104 | | | $ | 4,181 | | | $ | 4,108 | | | $ | 9,243 | |
| | | | | | | | | | | | | | | | | |
Basic earnings per common share: | | | | | | | | | | | | | | | | |
Continuing operations | | $ | 0.21 | | | $ | 0.16 | | | $ | 0.27 | | | $ | 0.46 | |
Discontinued operations | | | - | | | | 0.10 | | | | - | | | | 0.12 | |
Basic earnings per common share | | $ | 0.21 | | | $ | 0.26 | | | $ | 0.27 | | | $ | 0.58 | |
| | | | | | | | | | | | | | | | | |
Diluted earnings per common share: | | | | | | | | | | | | | | | | |
Continuing operations | | $ | 0.21 | | | $ | 0.16 | | | $ | 0.27 | | | $ | 0.45 | |
Discontinued operations | | | - | | | | 0.10 | | | | - | | | | 0.12 | |
Diluted earnings per common share | | $ | 0.21 | | | $ | 0.26 | | | $ | 0.27 | | | $ | 0.57 | |
| | | | | | | | | | | | | | | | | |
Weighted-average number of commonshares outstanding: | | | | | | | | | | | | | | | | |
Basic | | | 14,893,595 | | | | 16,097,198 | | | | 14,975,582 | | | | 16,036,959 | |
Diluted | | | 15,019,312 | | | | 16,240,898 | | | | 15,098,945 | | | | 16,193,372 | |
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Providence Service Corporation
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The Providence Service Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
| | | June 30, 2016 | | | December 31, 2015 | |
Assets | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 68,824 | | | $ | 84,770 | |
Accounts receivable, net of allowance | | | 178,295 | | | | 178,049 | |
Other current assets (1) | | | 78,260 | | | | 56,905 | |
Total current assets | | | 325,379 | | | | 319,724 | |
Property and equipment, net | | | 67,324 | | | | 57,787 | |
Goodwill and intangible assets, net | | | 601,076 | | | | 625,980 | |
Other long-term assets (2) | | | 42,486 | | | | 46,711 | |
Total assets | | $ | 1,036,265 | | | $ | 1,050,202 | |
Liabilities and stockholders' equity | | | | | | | | |
Current liabilities: | | | | | | | | |
Current portion of long-term obligations | | $ | 35,250 | | | $ | 31,375 | |
Other current liabilities (3) | | | 275,823 | | | | 263,897 | |
Total current liabilities | | | 311,073 | | | | 295,272 | |
Long-term obligations, less current portion | | | 272,828 | | | | 268,696 | |
Other long-term liabilities (4) | | | 118,716 | | | | 118,526 | |
Total liabilities | | | 702,617 | | | | 682,494 | |
Mezzanine and stockholders' equity | | | | | | | | |
Convertible preferred stock, net | | | 77,565 | | | | 77,576 | |
Stockholders' equity | | | 256,083 | | | | 290,132 | |
Total liabilities and stockholders' equity | | $ | 1,036,265 | | | $ | 1,050,202 | |
(1) Comprised of other receivables, restricted cash, deferred tax assets and prepaid expenses and other. |
(2) Comprised of restricted cash less current portion, deferred tax assets and other assets. |
(3) Comprised of accounts payable, accrued expenses, accrued transportation costs, deferred revenue and reinsurance liability reserves. |
(4) Includes deferred tax liabilities and other long-term liabilities. |
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Providence Service Corporation
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The Providence Service Corporation
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
| | | Six months ended June 30, | |
| | | 2016 | | | | 2015 | (1) |
Operating activities | | | | | | | | |
Net income | | $ | 6,123 | | | $ | 12,824 | |
Depreciation and amortization | | | 29,150 | | | | 29,857 | |
Stock based compensation | | | 1,947 | | | | 6,058 | |
Equity in net loss of investee | | | 4,176 | | | | 3,542 | |
Other non-cash charges | | | (8,167 | ) | | | (4,839 | ) |
Changes in working capital (2) | | | 32,605 | | | | (23,886 | ) |
Income taxes payable on sale of business | | | (28,337 | ) | | | - | |
Net cash provided by operating activities | | | 37,497 | | | | 23,556 | |
Investing activities | | | | | | | | |
Purchase of property and equipment | | | (23,636 | ) | | | (13,122 | ) |
Acquisition, net of cash acquired | | | - | | | | (1,665 | ) |
Equity investments | | | (6,381 | ) | | | (13,784 | ) |
Other investing activities | | | 3,840 | | | | (422 | ) |
Net cash used in investing activities | | | (26,177 | ) | | | (28,993 | ) |
Financing activities | | | | | | | | |
Proceeds from issuance of preferred stock, net of issuance costs | | | - | | | | 80,667 | |
Preferred stock dividends | | | (2,197 | ) | | | (1,698 | ) |
Repurchase of common stock, for treasury | | | (32,534 | ) | | | (734 | ) |
Net, proceeds (repayment) of long-term debt | | | 7,000 | | | | (87,125 | ) |
Other financing activities | | | 998 | | | | (2,909 | ) |
Net cash used in financing activities | | | (26,733 | ) | | | (11,799 | ) |
Effect of exchange rate changes on cash | | | (533 | ) | | | 1,991 | |
Net change in cash | | | (15,946 | ) | | | (15,245 | ) |
Cash at beginning of period | | | 84,770 | | | | 160,406 | |
Cash at end of period | | $ | 68,824 | | | $ | 145,161 | |
(1) Includes both continuing and discontinued operations. |
| |
(2) Comprised of changes in accounts receivable, other receivables, restricted cash, prepaid expenses, accounts payable, accrued expenses, accrued transportation costs, deferred revenue and other liabilities. |
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Providence Service Corporation
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The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA and Segment Information
(in thousands)
(Unaudited)
| | | Three Months Ended June 30, 2016 | |
| | | NET Services | | | WD Services | | | HA Services | | | Corporate and Other | | | Total | |
| | | | | | | | | | | | | | | | | | | | | |
Service revenue, net | | $ | 309,156 | | | $ | 89,289 | | | $ | 52,272 | | | $ | (85 | ) | | $ | 450,632 | |
| | | | | | | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | |
Service expense | | | 285,687 | | | | 82,073 | | | | 36,963 | | | | 327 | | | | 405,050 | |
General and administrative expense | | | 2,785 | | | | 8,585 | | | | 662 | | | | 5,341 | | | | 17,373 | |
Depreciation and amortization | | | 2,931 | | | | 3,836 | | | | 7,965 | | | | 82 | | | | 14,814 | |
Total operating expenses | | | 291,403 | | | | 94,494 | | | | 45,590 | | | | 5,750 | | | | 437,237 | |
| | | | | | | | | | | | | | | | | | | | | |
Operating income (loss) | | | 17,753 | | | | (5,205 | ) | | | 6,682 | | | | (5,835 | ) | | | 13,395 | |
| | | | | | | | | | | | | | | | | | | | | |
Other expenses: | | | | | | | | | | | | | | | | | | | | |
Interest expense, net | | | (1 | ) | | | 56 | | | | (2 | ) | | | 3,383 | | | | 3,436 | |
Equity in net loss of investee | | | - | | | | 1,459 | | | | - | | | | - | | | | 1,459 | |
Gain on foreign currency transactions | | | - | | | | (773 | ) | | | - | | | | (2 | ) | | | (775 | ) |
Income (loss) from continuing operations,before income tax | | | 17,754 | | | | (5,947 | ) | | | 6,684 | | | | (9,216 | ) | | | 9,275 | |
Provision (benefit) for income taxes | | | 6,044 | | | | (797 | ) | | | 2,466 | | | | (2,433 | ) | | | 5,280 | |
Income (loss) from continuing operations, net of taxes | | | 11,710 | | | | (5,150 | ) | | | 4,218 | | | | (6,783 | ) | | | 3,995 | |
| | | | | | | | | | | | | | | | | | | | | |
Interest expense, net | | | (1 | ) | | | 56 | | | | (2 | ) | | | 3,383 | | | | 3,436 | |
Provision (benefit) for income taxes | | | 6,044 | | | | (797 | ) | | | 2,466 | | | | (2,433 | ) | | | 5,280 | |
Depreciation and amortization | | | 2,931 | | | | 3,836 | | | | 7,965 | | | | 82 | | | | 14,814 | |
EBITDA | | | 20,684 | | | | (2,055 | ) | | | 14,647 | | | | (5,751 | ) | | | 27,525 | |
| | | | | | | | | | | | | | | | | | | | | |
Gain on foreign currency transactions | | | - | | | | (773 | ) | | | - | | | | (2 | ) | | | (775 | ) |
WD Services adjustments (1) | | | - | | | | 3,919 | | | | - | | | | - | | | | 3,919 | |
Adjusted EBITDA | | $ | 20,684 | | | $ | 1,091 | | | $ | 14,647 | | | $ | (5,753 | ) | | $ | 30,669 | |
(1) Includes expense related to redundancy costs of $3,665 and income tax benefit and D&A included within equity in net loss of investee of $254.
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Providence Service Corporation
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The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA and Segment Information
(in thousands)
(Unaudited)
| | | Three Months Ended June 30, 2015 (1) | |
| | | NET Services | | | WD Services | | | HA Services | | | Corporate and Other | | | Total | |
| | | | | | | | | | | | | | | | | | | | | |
Service reveanue, net | | $ | 270,690 | | | $ | 92,175 | | | $ | 55,404 | | | $ | (31 | ) | | $ | 418,238 | |
| | | | | | | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | |
Service expense | | | 246,931 | | | | 83,308 | | | | 41,193 | | | | 184 | | | | 371,616 | |
General and administrative expense | | | 2,554 | | | | 7,984 | | | | 760 | | | | 6,996 | | | | 18,294 | |
Depreciation and amortization | | | 2,329 | | | | 3,332 | | | | 7,185 | | | | 345 | | | | 13,191 | |
Total operating expenses | | | 251,814 | | | | 94,624 | | | | 49,138 | | | | 7,525 | | | | 403,101 | |
| | | | | | | | | | | | | | | | | | | | | |
Operating income (loss) | | | 18,876 | | | | (2,449 | ) | | | 6,266 | | | | (7,556 | ) | | | 15,137 | |
| | | | | | | | | | | | | | | | | | | | | |
Other expenses: | | | | | | | | | | | | | | | | | | | | |
Interest expense, net | | | - | | | | (58 | ) | | | (5 | ) | | | 3,785 | | | | 3,722 | |
Equity in net loss of investee | | | - | | | | 1,059 | | | | - | | | | - | | | | 1,059 | |
Gain on foreign currency transactions | | | - | | | | (714 | ) | | | - | | | | - | | | | (714 | ) |
Income (loss) from continuing operations,before income tax | | | 18,876 | | | | (2,736 | ) | | | 6,271 | | | | (11,341 | ) | | | 11,070 | |
Provision (benefit) for income taxes | | | 7,183 | | | | (785 | ) | | | 2,521 | | | | (2,692 | ) | | | 6,227 | |
Income (loss) from continuing operations, net of taxes | | | 11,693 | | | | (1,951 | ) | | | 3,750 | | | | (8,649 | ) | | | 4,843 | |
| | | | | | | | | | | | | | | | | | | | | |
Interest expense, net | | | - | | | | (58 | ) | | | (5 | ) | | | 3,785 | | | | 3,722 | |
Provision (benefit) for income taxes | | | 7,183 | | | | (785 | ) | | | 2,521 | | | | (2,692 | ) | | | 6,227 | |
Depreciation and amortization | | | 2,329 | | | | 3,332 | | | | 7,185 | | | | 345 | | | | 13,191 | |
| | | | | | | | | | | | | | | | | | | | | |
EBITDA | | | 21,205 | | | | 538 | | | | 13,451 | | | | (7,211 | ) | | | 27,983 | |
| | | | | | | | | | | | | | | | | | | | | |
Charges related to the separation of an executive officer, net | | | - | | | | - | | | | - | | | | 695 | | | | 695 | |
WD Services adjustments (2) | | | - | | | | 2,895 | | | | - | | | | - | | | | 2,895 | |
Adjusted EBITDA | | $ | 21,205 | | | $ | 3,433 | | | $ | 13,451 | | | $ | (6,516 | ) | | $ | 31,573 | |
(1) Beginning in the fourth quarter of 2015, the Company began including in the calculation of WD Services Adjusted EBITDA expenses related to restricted shares and cash placed into escrow accounts at the time of the Ingeus acquisition as well as redundancy costs associated with WD Services. The Company has updated the 2015 quarterly presentations of Adjusted EBITDA to be consistent with these changes.
(2) Includes expense related to restricted shares and cash placed into escrow at the time of the Ingeus acquisition and other acquisition related costs of $1,980, redundancy costs of $1,882, income tax benefit and D&A included within equity in net loss of investee of ($253), and gain on foreign currency transactions of ($714).
--more--
Providence Service Corporation
Page 10
The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA and Segment Information
(in thousands)
(Unaudited)
| | | Six Months Ended June 30, 2016 | |
| | | NET Services | | | WD Services | | | HA Services | | | Corporate and Other | | | Total | |
| | | | | | | | | | | | | | | | | | | | | |
Service revenue, net | | $ | 600,140 | | | $ | 180,332 | | | $ | 102,864 | | | $ | (54 | ) | | $ | 883,282 | |
| | | | | | | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | |
Service expense | | | 552,656 | | | | 163,745 | | | | 74,753 | | | | 384 | | | | 791,538 | |
General and administrative expense | | | 5,622 | | | | 16,456 | | | | 1,318 | | | | 13,150 | | | | 36,546 | |
Depreciation and amortization | | | 5,807 | | | | 7,415 | | | | 15,762 | | | | 166 | | | | 29,150 | |
Total operating expenses | | | 564,085 | | | | 187,616 | | | | 91,833 | | | | 13,700 | | | | 857,234 | |
| | | | | | | | | | | | | | | | | | | | | |
Operating income (loss) | | | 36,055 | | | | (7,284 | ) | | | 11,031 | | | | (13,754 | ) | | | 26,048 | |
| | | | | | | | | | | | | | | | | | | | | |
Other expenses: | | | | | | | | | | | | | | | | | | | | |
Interest expense, net | | | (2 | ) | | | 89 | | | | (4 | ) | | | 6,988 | | | | 7,071 | |
Equity in net loss of investee | | | - | | | | 4,176 | | | | - | | | | - | | | | 4,176 | |
Gain on foreign currency transactions | | | - | | | | (848 | ) | | | - | | | | (1 | ) | | | (849 | ) |
Income (loss) from continuing operations,before income tax | | | 36,057 | | | | (10,701 | ) | | | 11,035 | | | | (20,741 | ) | | | 15,650 | |
Provision (benefit) for income taxes | | | 13,193 | | | | (979 | ) | | | 4,150 | | | | (6,837 | ) | | | 9,527 | |
Income (loss) from continuing operations, net of taxes | | | 22,864 | | | | (9,722 | ) | | | 6,885 | | | | (13,904 | ) | | | 6,123 | |
| | | | | | | | | | | | | | | | | | | | | |
Interest expense, net | | | (2 | ) | | | 89 | | | | (4 | ) | | | 6,988 | | | | 7,071 | |
Provision (benefit) for income taxes | | | 13,193 | | | | (979 | ) | | | 4,150 | | | | (6,837 | ) | | | 9,527 | |
Depreciation and amortization | | | 5,807 | | | | 7,415 | | | | 15,762 | | | | 166 | | | | 29,150 | |
EBITDA | | | 41,862 | | | | (3,197 | ) | | | 26,793 | | | | (13,587 | ) | | | 51,871 | |
| | | | | | | | | | | | | | | | | | | | | |
Gain on foreign currency transactions | | | - | | | | (848 | ) | | | - | | | | (1 | ) | | | (849 | ) |
WD Services adjustments (1) | | | - | | | | 4,972 | | | | - | | | | - | | | | 4,972 | |
| | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 41,862 | | | $ | 927 | | | $ | 26,793 | | | $ | (13,588 | ) | | $ | 55,994 | |
(1) Includes expense related to redundancy costs of $5,056 and income tax benefit and D&A included within equity in net loss of investee of ($84).
Providence Service Corporation
Page 11
The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA and Segment Information
(in thousands)
(Unaudited)
| | | Six Months Ended June 30, 2015 (1) | |
| | | NET Services | | | WD Services | | | HA Services | | | Corporate and Other | | | Total | |
| | | | | | | | | | | | | | | | | | | | | |
Service revenue, net | | $ | 525,450 | | | $ | 199,792 | | | $ | 112,836 | | | $ | (11 | ) | | $ | 838,067 | |
| | | | | | | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | |
Service expense | | | 476,178 | | | | 177,540 | | | | 84,406 | | | | 29 | | | | 738,153 | |
General and administrative expense | | | 5,051 | | | | 15,209 | | | | 1,282 | | | | 16,218 | | | | 37,760 | |
Depreciation and amortization | | | 4,606 | | | | 6,648 | | | | 14,367 | | | | 623 | | | | 26,244 | |
Total operating expenses | | | 485,835 | | | | 199,397 | | | | 100,055 | | | | 16,870 | | | | 802,157 | |
| | | | | | | | | | | | | | | | | | | | | |
Operating income (loss) | | | 39,615 | | | | 395 | | | | 12,781 | | | | (16,881 | ) | | | 35,910 | |
| | | | | | | | | | | | | | | | | | | | | |
Other expenses: | | | | | | | | | | | | | | | | | | | | |
Interest expense, net | | | (1 | ) | | | (58 | ) | | | (9 | ) | | | 8,985 | | | | 8,917 | |
Equity in net loss of investee | | | - | | | | 3,542 | | | | - | | | | - | | | | 3,542 | |
Gain on foreign currency transactions | | | - | | | | (395 | ) | | | - | | | | - | | | | (395 | ) |
Income (loss) from continuing operations,before income tax | | | 39,616 | | | | (2,694 | ) | | | 12,790 | | | | (25,866 | ) | | | 23,846 | |
Provision (benefit) for income taxes | | | 15,312 | | | | 1,640 | | | | 5,194 | | | | (8,998 | ) | | | 13,148 | |
Income (loss) from continuing operations, net of taxes | | | 24,304 | | | | (4,334 | ) | | | 7,596 | | | | (16,868 | ) | | | 10,698 | |
| | | | | | | | | | | | | | | | | | | | | |
Interest expense, net | | | (1 | ) | | | (58 | ) | | | (9 | ) | | | 8,985 | | | | 8,917 | |
Provision (benefit) for income taxes | | | 15,312 | | | | 1,640 | | | | 5,194 | | | | (8,998 | ) | | | 13,148 | |
Depreciation and amortization | | | 4,606 | | | | 6,648 | | | | 14,367 | | | | 623 | | | | 26,244 | |
EBITDA | | | 44,221 | | | | 3,896 | | | | 27,148 | | | | (16,258 | ) | | | 59,007 | |
| | | | | | | | | | | | | | | | | | | | | |
Charges related to the separation of an executive officer, net | | | - | | | | - | | | | - | | | | 695 | | | | 695 | |
WD Services adjustments (2) | | | - | | | | 4,891 | | | | - | | | | - | | | | 4,891 | |
Adjusted EBITDA | | $ | 44,221 | | | $ | 8,787 | | | $ | 27,148 | | | $ | (15,563 | ) | | $ | 64,593 | |
(1) Beginning in the fourth quarter of 2015, the Company began including in the calculation of WD Services Adjusted EBITDA expenses related to restricted shares and cash placed into escrow accounts at the time of the Ingeus acquisition as well as redundancy costs associated with WD Services. The Company has updated the 2015 quarterly presentations of Adjusted EBITDA to be consistent with these changes.
(2) Includes expense related to restricted shares and cash placed into escrow at the time of the Ingeus acquisition and other acquisition related expenses of $3,970, redundancy costs of $2,631, income tax benefit and D&A included within equity in net loss of investee of ($1,315), and gain on foreign currency transactions of ($395).
Providence Service Corporation
Page 12
The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Adjusted Net Income and Adjusted Net Income per Common Share
(in thousands, except share and per share data)
(Unaudited)
| | | Three months ended June 30, | | | Six months ended June 30, | |
| | | 2016 | | | 2015 | | | 2016 | | | 2015 | |
| | | | | | | | | | | | | | | | | |
Income from continuing operations, net of tax | | $ | 3,995 | | | $ | 4,843 | | | $ | 6,123 | | | $ | 10,698 | |
Net loss attributable to noncontrolling interests | | | 628 | | | | 59 | | | | 735 | | | | 47 | |
| | | | | | | | | | | | | | | | | |
WD Services adjustments | | | 3,386 | (1) | | | 3,004 | (2) | | | 5,169 | (3) | | | 6,062 | (4) |
Gain on foreign currency transactions | | | (2 | ) | | | - | | | | (1 | ) | | | - | |
Payments related to separation arrangements with executiveofficer, net | | | - | | | | 695 | | | | - | | | | 695 | |
Intangible amortization expense | | | 8,817 | | | | 9,881 | | | | 17,632 | | | | 19,692 | |
Tax effected impact of adjustments | | | (3,729 | ) | | | (4,264 | ) | | | (7,141 | ) | | | (8,243 | ) |
Adjusted Net Income | | | 13,095 | | | | 14,218 | | | | 22,517 | | | | 28,951 | |
| | | | | | | | | | | | | | | | | |
Dividends on convertible preferred stock | | | (1,099 | ) | | | (1,104 | ) | | | (2,197 | ) | | | (1,698 | ) |
Less: Accretion of convertible preferred stock discount | | | - | | | | (826 | ) | | | - | | | | (1,071 | ) |
Income allocated to participating securities | | | (1,429 | ) | | | (1,369 | ) | | | (2,409 | ) | | | (2,226 | ) |
Adjusted Net Income available to common stockholders | | $ | 10,567 | | | $ | 10,919 | | | $ | 17,911 | | | $ | 23,956 | |
| | | | | | | | | | | | | | | | | |
Adjusted Net Income per common share | | $ | 0.70 | | | $ | 0.67 | | | $ | 1.19 | | | $ | 1.48 | |
| | | | | | | | | | | | | | | | | |
Diluted weighted-average number of common shares outstanding | | | 15,019,312 | | | | 16,240,898 | | | | 15,098,945 | | | | 16,193,372 | |
(1) WD Services adjustments include redundancy costs of $3,665, amortization expense included within equity in net loss of investee of $494, and gain on foreign currency transactions of ($773).
(2) WD Services adjustments include expense related to restricted shares and cash placed into escrow at the time of the Ingeus acquisition and other acquisition related costs of $1,980, redundancy costs of $1,882, gain on foreign currency transactions of ($714), and amortization expense included within equity in net loss of investee of ($144).
(3) WD Services adjustments include redundancy costs of $5,056, amortization expense included within equity in net loss of investee of $961, and gain on foreign currency transactions of ($848).
(4) WD Services adjustments include expense related to restricted shares and cash placed into escrow at the time of the Ingeus acquisition of $3,970, redundancy costs of $2,631, gain on foreign currency transactions of ($395), and amortization expense included within equity in net loss of investee of ($144).
###
