PRSC - Earnings call transcript Q1 2018

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Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2018 Providence Service Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions].

As a reminder, this call is being recorded. to Chief host of Accounting like Laurence today’s Finance. now Interim Orton, Officer would introduce for your conference I and SVP Mr. Orton, begin. you may

Laurence Orton

joining Executive call David Officer. Sarah. first-quarter from on Officer Providence you, Good and Pate, everybody. Shackelton, Severance, today you Thank Interim Interim Carter Chief Financial morning, the call Transformation XXXX Bill webcast. and for conference are With Officer, me Chief Thank Providence's Chief

and reconciliation the Mr. as statements on call, I'd Mr. yesterday today's Private can on Severance which approximately I'd CEO, like this Just yesterday's SEC in to the interim via and call, under phone risks, the and statements evening. be over our the will regarding management that, press remind the And with press to numbers with Pate, one And presentation as statements in release, materially. investor contained the replay call X-K, investors. differ Those during the turn course a you our website the measures other a company release filings hour these certain our and will finished to company's which Form current the for the or that, which everyone Providence's started, cause it And be under found of be in today's release. like factors press remind Information will call, the non-GAAP comparable this Act. information SEC. in non-GAAP the company's involve characterized X-K. found Pate. is arranged most can Shackelton to our also our But that Reform to of to the that website actual definition and Carter also now financial Events be make provide before measures referencing certain Calendar discuss to will results listed accessed may The presentation events to forward-looking get GAAP finally, was Form Carter? in be Mr. to factors and can investor or uncertainties in available Securities these call Litigation additional an after measures we've effort of during we

Carter Pate

of Well well start joining to thank the good this you, Laurence, the morning it us in strong handing and straight will before detail. everyone to number organizational provide quarter’s activities strategic as to you more and the jumping of a into by going some that over highlights we consolidation I’m including in operational the results update earnings thank then this the as to call David announced through financial on talk an Bill for morning. April. us

pleased and the on has into that momentum in to operational year-over-year I’m Laurence page we revenue the the starting earnings three of referenced. the positive quarter that Now by X.X% basis, On in increased a growth XXXX continued XXXX. consolidated first that first presentation quarter. of report experienced

revenue cash. grew with still decreased currency million number I in strong X% Cash from the at adjusted earnings $XX.X quarter at in foreign When two take which segment. out new strengthening to growing WDs EBITDA also million our the which share by allowed last increase quarter, year. same on of grew did for an by over was $X of $X.XX was $XX consolidated for noise XX%, million. around benefit due this spend over of us very services impacts, largely repurchases the Providence the with pound $XX.X movements, and during due period revenue these a the the by Adjusted little to per LogistiCare favorable X%. adoption revenue of million, XX% around to million share by quarter operations some the on there’s yet our standard $X.X Now Revenue from

revenue grew one in Now year-over-year of the achieved revenue due LogistiCare to LogistiCare see our and contracts back quarter, growth. by on X.X% you’ll however, change four, the to then out page the new accounting turn actually in standard, reported if X% you

LogistiCare’s experience couple QX, were including margin to improvement XXXX. back adjusted contributed over solid the of utilization our line were started versus X%, bring Now increased at in a with EBITDA beginning QX, of in of to in margins states rates back in this There that a number we pricing a to improvement XXXX factors XXXX. increases

positive on transportation and in Now costs year-over-year reducing impact margins addition, focused on a our basis. initiatives had a our meaningful to enhancement value

costs expect We technology implement as transportation practices models, best we our and extensive contracting new transportation to increase continue to to our costing the initiatives benefits of across network. these continue

overruns. from our to we delays service turning LogistiCare costs our our call, that Now rollout of next-gen On initiatives. transportation platform the cost last operational initiatives noted was experiencing timing our and some technology

Technology address $XX the on particularly, brought still The that we streams, light XXXX, holds. with overall stood costs the initiatives significant in in quarter Chief million a cost-saving of holistically solutions. at is in we of our our wins transportation types on technology work first look the we where Officer at end of these cloud-based view Now of the of issue, news large-scale, to new this implementing when good experience achieving

portion we company improvements, positioning. quality are competitive reinvest to these our and that future of growth, and into support plan to Now a service to strong back continue savings topline remember the again

to of deliver the as technology, field primary quarter to risk to we new We management feel and with the were Virginia explore network brought Now of pipeline new renewal will about opportunities expand opportunities. of develop the pleased role service state President addition opportunities. models. the future our in good contract based help a Vice contract on very large capabilities new widen in we lines people and announce front, that our our complex leverage to President hired, on organically actively our addition the Strategy development, Growth the experience and new Also, senior new a the in Senior of we Vice ways new the in and is CTO into of capitalize whose

new Services so then, to $X.X on better the headline the million for the to care in benefit currency end performance will Now the on and prior flow. to does operational on quarter revenue impact Bill numbers commentary in cash revenue the accounting negative impact that reiterate movements fluctuations. of detail is not the later, day which new suggest focus like Adjusted the the did reported page EBITDA. my more than five, impact the especially standard of explain really turning would underlying would a in and revenue the what I performance had of adoption EBITDA. Positive at $X.X but adjusted about, is the on standard we billion Obviously I’ll standard, QX, new XXXX of currency WD

U.K. revenue to impact our employability the down have wind down. new muted contract program Program, as legacy Work decline due efforts expected, continued diversification of outside the of work the wins of wind the as Now however, as well the

Program. of As the for of workday new beginning providing awarded & all were Work we [ph] the services Health our of areas contract March, in

mobilization ramp In cost addition, expected. the up under Program, gradually have as Health than & to less started had under been volumes the program Work

U.K. our business employability momentum prevention of continued health in shown for the our to diabetes the outside We develop contracts as traditional program, also under by positive

positive impact both in as adjustment said, revenue QX, EBITDA adjusted for a contractual As the to when revenue is addition had $X.X the revenue actually I much significant to underlying XXXX When quarter, new numbers combine new the headline on reported comp see included adjusted the more and million a million impact was quarter. resulting large $X quarter in it with this against, delta negative tough standard that Rehabilitation Contract of to in was standard, performance a you Offender a QX, favorable from compared performance approximately for strong EBITDA and compared quickly XXXX. very can negative our the you to the up

words Bill organizational before through to more we in the results the through David? financials to announced. plan you say David a few call hand as over on Now take takes well to I’d consolidation details, as you to matrix the recently like

David Shackelton

to in financial in employee Thank made and clinic of you, Networks about HealthFair. engagement off to member sharing and begun a the the of and department centers, joint Matrix acquisition excited offerings. six, touch Matrix, good our we is On and call Clinical on have start, page full mobile integration of first platforms. investment swing in-home the HealthFair of the is companies on IT provided also NET and progress strategic on in integration We’ve where be benefits The including Carter. the continue the I’ll two

the during track targeted integration, and to our in was first the full Matrixes the quarter, synergy Although were number. year our Outside realization are operations the improved synergy we also minor quarter. our for realize on [ph] this was we expected very

adoption volumes result disease client year-over-year We volumes customer of in up increasing customer New organic as quarter. us at did helped of expected contract existing peripheral a new HealthFair. well targeting basis contract start artery growth see costs screening on a as revenue strong put the [ph] margins as

Excluding consistent. HealthFair, Matrix’s year-over-year margins were fairly

plan call few last handing before organizational Carter, we the Now back a night. announced moments to on the spend consolidation I’ll

about resources corporate. well between capital our segments spoke acquisition and to across our on deploy allocation including last we’ve on how Providence, As as call, on we focus earnings we strategy as our continued

opportunities, whose we include, These into value see into enhancement for We and CapEx currently both the in around example organic, future acquisitions. lines types of have continue highest and initiatives, system all that potential residing also service investments as emphasized couple potential on and in existing in expansion company's our our LogistiCare. including return new service last return activities directly line, calls to the

to of allowing asset smaller story holding to strategic as cost LogistiCare. more deconsolidation the this process segment. functions $XX take on XXXX, the We’ve LogistiCare. the forward regards is folding our strategic into will efforts lifting to believe infrastructure This holding available further to streamlined special I’d CFO. us you also integrate organizational by more approximately me including effectively basis excited in Consolidation with permanent in infrastructure by feedback to resources. efficiently decided create LogistiCare very at into to we simplify of $X levels able is plan deploy cultural expected is transition an the support our in like to core building and a as available more leadership We stands Provident the $X significant on the from the shareholder right a have In explore strategic shareholder the to million opportunities turn sharpening and be and atleast organization in and months Important execution creation the will decision alternatives a corporate seen in share We value may is summary, in plan to to result greater capital this and and press our allow approximately systems are Atlanta us [Indiscernible] non-cash. towards we shifting and essentially annual back you. also structure of you with now or the our that save hiring from drive Our performed XX% the of Carter, focus alignment of to expected company the look Atlanta operational to be WD allocate organizational of well infrastructure. over time. as release to capital with million to on about in investors growth streamline trade Services the of LogistiCare, focus updating to result observations. also consolidation and growth creating company we activities appropriate with structure XX let our to call strategic and and that more million this resources significant and these process strategic the opportunities appropriate in company growth

Carter Pate

David. thanks Okay,

from the Bill based of of previously last over and the and us financials turn CFO introduce was Officer now has Chief as the Company. a a through interim over financials in in-depth organizational the Providence going to to me took full-time the Bill, walk Bill until role hold I’m Accounting this an to for the on Let the basis David and you Atlanta. two CFO now is great knowledge operations to Severance, during expected this consolidation. years call morning. Bill Province hire who we

Bill Severance

I’ll start seven page the my of presentation focus commentary on right, thanks Carter. segments. and the All on

taken As our with consolidated starting results, through we’ve you already NET.

$X.X The of by significant and year. impacted certain York million, on renewed Virginia. margins negotiated reduction NET were in The on was standard, compared revenue new offset benefits contracts increased as certain of of for New state in revenue a as revenue New X% and growth X.X% efforts contract as the reported an higher in implementation in contract, which with no EBITDA our last partially QX, Our key X.X% XXXX, standard quarter. resulted state MCO resulted These benefited were as at rates the On year-over-year end the also but Florida a and in including revenue Texas. we MCO contracts in EBITDA. offset X% New to ending in had an in were adjustments. adjustments York. and Indiana higher membership by contract which increased reported prior enhancement in The higher Adjusted for well costs one transportation favorable utilization a partially basis. the York, value was now basis. of contract existing impact from align by seeing from impact XXXX, contracts and to the ended across favorable revenue contract on and in across in state being our New the of this reduced net contracts The well the drivers April the of adjusted revenue state revenue lower Revenue various new contract increases reported a contract contracts, basis, membership change rates improvement year. utilization to the apples-to-apples to

full is NET Our outlook unchanged. year for the for XXXX services

be forecast approximately target to to EBITDA growth continue adjusted to to and our long-term, NET X% margins We for revenue X%. be multiyear below of X%, services,

year, revenue WDs due declined Moving reported $X decline new offsetting the well the revenue compared the revenue the -- significant of and adjustments million reduction business. services, of wind on an contract decline. approximately to million quarter rehabilitation however, $XX.X The of in apples-to-apples program, reduction plus million, appreciation of in last pound X%. million $X.X to as was revenue resulted the benefit, legacy for or in as resulting The $XX.X offender for X.X% basis to standard in U.K. a a in primarily resulted work down an revenue was in U.K.

of health XXXX favorable from across QX, we impact a see did most our as as contract businesses. during well contracts, However, international our

decline business. prior of a under as new the compared the We have negative as standard the and also negative by the offender the benefited the a restructuring to still of were lower revenue standard Ingeus reported the Services programs. started service referrals Program. Adjusted new year, EBITDA offset in impact from EBITDA headwinds Work adjusted to as revenue slightly rehabilitation impact adjustments year contract was see $X.X due for the Health from corporate million, to impact impact shared costs prior These quarter WD the more $X.X had new million. our of Futures favorable and excluding

significant the Although, be for the still the as Services it revenue as in EBITDA We revenue expect on to digit consistent don't impact digit expect new the EBITDA revenue during in adjusted we range the decline continued adjusted and the year remainder reported XXXX negative the the be on we year, and of range. impact to both in XXXX mid-single quarter. expect margins in WD full to for with mid-single first was

expense to the incurred than major stock-based driver quarter an for in and the lower million costs our Turning adjusted to which awards underlying price. of increase was prior corporate. in due higher offset increase settled the partially in XXX,XXX by was loss is compensation. million non-cash We operating of stock EBITDA $X.X The This year. an significant $X.X cash

year negative to David excluding be approximately EBITDA organizational adjusted $XX we that the million. consolidation full the referenced, For corporate cost implementation expect

startup is Remember equity that an increased since therefore basis. of Matrix Revenue and seven, to on for information as in date only of growth margin contracts. information of treated adjusted revenue consolidate Providence. the our page pro negatively revenue on XXXX. don't cost by we investment attributable XX% in forma EBITDA with Matrix's page for EBITDA of acquisition February HealthFair XXXX were and result acquisition includes the due adjusted over HealthFair, HealthFair impacted its none the presented with XX.X% or HealthFair seven approximately a Matrix to QX the investment. on of XX% is The Lastly closed

with margin $X.X see of income million. a statement loss $XXX in perspective, the Providence of the quarter to we equity year. improvement the expect From impact related million net recorded an We quarter. in over remainder the to transaction the of HealthFair due ended quarter expenses recorded of Matrix debt the

cash $XX the in the transportation that in reversed XXXX for year-over-year eight from QX, down QX, timing page payments, which to XXXX. flow solid provider cash operations very summary; QX, on Note benefited from a flow XXXX was flow million. Moving of was cash

pleased generation year was to $X our fund in million, health initiatives of with CapEx share than quarter the million. operations, last $XX full are our expectations lower $X.X of and the We repurchases. the for from with strategic the for cash and flow year line

Moving in to the over debt. ended the no cash balance sheet nine $XX We million and with quarter summary. page for long-term

value is Our of Matrix book million. $XXX

With the the that value this significantly understates HealthFair our approach market-based feel even to any asset. we view stronger acquisition in book value

Our end preferred is basis plus $XX a as common of on quarter count, share million. was converted which

through year-to-date is $XX.X we bought million per XXX,XXX share repurchases back on average $XX.XX. May price shares share For for X have

million As the I we that, line XXXX. increased we previously purchases Operator? our our $XX up current capacity questions. is and for reported buyback now With of through June $XX.X for will approximately capacity by open million

Operator

Labick question Instructions] [Operator with first Robert Our comes from Thank you. CJS Securities.

now open. line is Your

Robert Labick

on to XXXX. start Thank a good you. Congratulations

Carter Pate

Bob. you, Thank

Robert Labick

shares. their the both with if common preferreds start, on an I color shares great? for out the you or any commentary be that can night wanted preferred came notice the per opportunity to buyback S-X the any or wonder company if last to it common the that, that there's and was Capital around there I give the their Coliseum registered would

Carter Pate

morning here guess are we've yes, I'm recall the I XXXX has of about as is first the Chairman catching it terrific creation question. $XX got for you so apologies that Bob, stock shareholder the has absolute me in this around long-term I out years years. thank We're allergies perspective value somewhere all all share. let Chris a and was guessing six for our of an raspy Tucson with Well, morning, shareholder. the been our this guess been But since, they voice. apologize. and of us they Coliseum these and tremendous over really I around been I think us Board just had in just

the shareholder Regarding significant that holdings; share the won't I S-X and at believe even just no registering Coliseum have all though we're reason shares. a the remain to

on Chris Chris talking board, is daily, strategic involved this Regarding basis drive highly initiatives in driving value about with leading continue sometimes weekly He for solely value. a on focus personally, shareholders. incredibly I is constantly interact the and he and to

So, world event, and I'm to will caught the shareholder I a significant Chris I that remain a otherwise. he even in significant reason attention. don't no believe all this view the have though sure confidence have as the

Robert Labick

it. Got

Appreciate you. to Thanks that. very Shifting Okay. LogistiCare strong. fundamentals, margins of were

opportunities, under the of year? then X%, improvements phasing and bit a from that much were that? bit, kind over enhancement was the but nor'easters you it. bit I enhancement biggest year-over-year. about the in try benefit there spoke being the a from remember difficult, maybe bucket bunch the of Could of But to guess with points basis Jersey little the contract. value initiatives? How value talk a I breakdown the, the You a know I highlighted don't New I from obviously benefits was little course it’s them, know XXX so, the or in even about Northeast, timing much How up, maybe You you little

Bill Severance

Yes.

QX value in saw I from So, we was think million. was about enhancement the what benefit $X

QX, the the detail really question that ramped last kind will the in your up of initiative The we of yes, on as a obviously XXXX, there. our – was nor'easters. year-over-year, the there through savings. So, question of up David little very so of efforts take more you ramp phasing But benefit

benefit I or reduce think utilization don't that. we any that really from So significant saw

some bit in that really we where happened little a different year didn't see there actions other benefit it’s any So really from in drop Texas the utilization, that in than but quarter. last was the of a

David Shackelton

would in utilization from utilization I Yes, Bob. to the some country. we or headwinds see benefit believe. example This utilization in didn't We anywhere -- is actually for in either agree, York in either David. Northeast really New the saw in drop I

Robert Labick

Yes.

David Shackelton

impact invested previously, it the said we the we run of business ultimately this cost $X the of $XX about of in as million be expect program's what of about XXXX. track million. about still was of by results in terms said, $XX We're -- to to QX the Bill back on before that getting to we've enhancement In million value savings rate end year

$XX sorry, think savings, And year-over-year million XX that, Remember million in year-over-year million. basis XXXX, to did as year, million about $XX impact about year-over-year expect so year-over-year that benefit we $X on We about investment before or those the we savings being move throughout continue expect million cost we of net however impact on to basis again $X approximately in have XX from of $X approximately do that up. to the a cost XXXX the will improvement. resulting reinvest I ramp – the of a million savings.

Robert Labick

it. Got

Appreciate margins going point or utilization you utilization do about its what That's thing a believe increase to real you sticking just was continue are to do Any that. there very reason or announced; to that? to the that is year-over-year. then how you regard. Is trend? that expect to is can thinking how higher with and But you no it in utilization obviously, helpful. that Okay. benefit there terrific driving think given And you

David Shackelton

New a no think just And we it's hold to is increase. see York. going that in exactly always basis utilization reason quarterly pinpoint on to to have might example to for in We continue why blip utilization

by services the such by offerings and to caused us induces are services Medicaid greater that’s for of different Medicaid And on that outside control rates it quarter-over-quarter providers for under consumption sometimes changes. services Medicaid of a but basis it's quite utilization of our exactly reimbursement is members, by greater which difficult as things pinpoint

Robert Labick

Got it.

Okay. forma for over time, Is discuss the there will – of forma guess quarter year rate XX% ramping HealthFair's and about basis out. didn't off will non-linear have full I that Matrix, but and can this us do that the a can us call growth that anything growth that. of is run discussed the it Certainly you understand help it or you And how call full XXX think before? build then, growth number obviously last contracts model? that you makes Jumping that to pro XX%, pro a pro help about that you or good forma you is still be expectation thought believe million,

David Shackelton

Yes.

right. that have you Bob, So number

generate on XX% corporate. pro in combined of a that And as basis still HealthFair million revenue. Matrix $XXX million XXX I XXXX do growth forma So of and view the off

ramp a to in growth in right to HealthFair. is particularly XXXX regards there are that that You

XXXX. call as that I number last Matrix think of end mentioned I on as a new of well at the customers HealthFair the up signed had

ramp at So to was production QX the a their lot implementation this work volume. bus needed deliver including fleet of XXXX, there HealthFair, that's the in

the in the I the million Bill when had think, the of out acquisition quarter X HealthFair, end contributed for you about revenue. in quarter. so of And February through since HealthFair back closing mentioned

thus organically amount Matrix be number. that kind revenue grew year-over-year HealthFair's expected the to driving growth is over core of when can So that pro out just to approximately you XX%. forma almost growth XX% that that full-year Matrix, back for you see

Robert Labick

Terrific. Thank much. you very

David Shackelton

Thanks Bob.

Operator

you. Thank

I Carter further We any would have to no questions. now the Pate call for like over turn to remarks. further back

Carter Pate

that thank quarters. remarks. have the during conversations closing the have you. I just don’t any all I Enjoy we

meet start. meet look Providence, Bye-bye. in some that a our of up a to this much quarter continued LogistiCare and conversations early particularly gotten listening getting forward Thanks guys. you chance forward to with We so have had for morning, has not shareholders. far. terrific Looking Strong I so for

Operator

does conference. for today's you thank gentlemen, include and today's in program. This Ladies participating

disconnect. may great Everyone You day. all have a

ModivCare (MODV) 10 May 182018 Q1 Earnings call transcript