PRSC - Earnings call transcript Q2 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Q2 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 to be given at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the call over to Laurence Orton.

begin. may You

Laurence Orton

and Good and CAO Michelle. you This Laurence Officer. Interim conference is for Providence today Thank Carter Severance, are VP morning, Interim of Interim Pate, call XXXX quarter and Providence's Executive Thank With finance Orton, me joining from Officer you, Chief second everybody. webcast. Bill for all Financial Providence. Chief

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

So CEO, to the now over call Pate. Providence's interim I'd turn like to Carter

Carter Pate

everyone the this thank and us start talk as the going Well Laurence thank straight call to this who morning before you financial joining Bill, more detail. by I'm some then morning. and results as through going will handing into good over for highlights quarter's operational it us earnings in well to you, to

if of So three. have start you, you on front in the page presentation let's

this saw revenue the the that a the increased basis, had X.X% to there standard offset was from I momentum an Nevertheless, by of update second the investors partially quarter want positive with million. give revenue operational you a consolidated by positive we'd quarters. quarter The growth, despite this highlights effect X.X exchange revenue As in with was us WD new little Services operational negative X.X back previous over several in On our generating to segment morning. share quarter. which foreign million that indicated July many of demonstrated we during that were earnings positive

with two consolidated at by grew these X.X% account, into growing little taking over Now, revenue LogistiCare a X.X%.

NET more Now, detail was was to quarter higher and impacted XX.X by EBITDA year for going to million cost the transportation in some in million segment discuss the adjusted compared prior in the that XX shortly. Services I'm

still quarter the ahead XXXX. XX% in period was million adjusted remain quarter EPS below But than XX.X to we compared of the we on but million Similarly EBITDA higher $X.XX, adjusted Now for second for was a same basis, our year-to-date basis. XXXX. last year-to-date XX.X year, on for the in Providence a was are

to NET move Now let me Services.

LogistiCare quarter. the revenue in to grew reported Turning X.X% four, page by

achieved LogistiCare growth. due contracts in back one the revenue you to out accounting on our standard, of year-over-year if that X.X% change However, new

also As indicated the quarter our the last previously had X.X% LogistiCare's margins lower been and we adjusted EBITDA than we at expecting, than finishing operational had lower in update, were X.X% year.

Services Let compression. in on that the drove NET me second what the short recap quarter term margin as we saw

transportation a the we saw and stretcher the is that shift vans referring much in In some include offerings. higher take as higher a cost were that our transportation These so cost of in in much overall bit particular Firstly, QX to the a really ambulances a the have higher noticeable non-emergency of financial costs modes ambulances. of higher of to case service didn't volume of of increase it impact. cost to mix I'm

crisis also per above and emphasize we we historical lastly network opioid our MCO members, providers another And member trip the mileage trip and driving of respond more their are for treatment some as all seeing increase trends. travelled clients which saw volume mileage funded higher is increases is available phenomenon in in mileage that and treatment promoting increase the distance services certain to care enforce opioid is the a narrower to types. to as to an The Additionally, volume average trip for are an trip seeing for mileage becomes we're new in than they MCO's states both their base, members. to as Secondly, an rally continued average health

value under that slower call cost in about savings we final than our The and that initiatives quarter observed a impact this anticipated realization we was center enhancement prior transportation of talked quarters. third and

in adversely can our business benefit additional operational rate our a term. we and we on are on our nature line we we in but the new muted these shifting additional certain making the in best this focus of across fully the and service the to by a mix of in to others partially procedures bring this of lead for modes trend driving positive the higher markets, the are be negotiation critical efforts cost which the initiatives But having positive this with to who periods Thus, renewed and negate different to seeing service presented addressed. just changes greater align emerges refocus now We can COO, I an Leading have back our requiring rates impact of also to outcomes associated margin a experiencing. the The across the hired generally documented service. in organization able are time that within once network in are of recently impact partially transportation efficiencies. transportation back cost, multiple we're is are effort, mix progress infrastructure the our tasked being can transportation. development. These cost but key payers, is contractual He initiatives of regions transportation practices profitability, and short bring our undoubtedly to with is providing pursuit the and

can place. payers, with adjustment Our been that experience put may period a of number to of that achieve this working but this, order has in quarters span closely we in

looking second well a just and what of a seeing basis on as an quarter, seasonal another margins first example positive when our proponents utilization after described of sequential decline Now, quarter fluctuation. such as element I've at we see

As contracts in of renewal our form see are temporary correct can usually by profitability. these we rate some fluctuations adjustment,

a first QX forward there through of in adjustments as costs in do transportation XXXX. initiatives. such in a as year we did adapt realize quarter. we're look in efforts the rate and in underlying of we to earnings more to have rate the of startup rates our and later recent did able did from but were experienced the In back QX further the we quarter redouble second we margin highlighted our benefit couple trends XXXX of fact these benefit In we I the from them in In Going XXXX, to of of incur quarter, the these benefit comments. number challenges some summary, to half analyze those level as and sequential utilization first we finally in a cost where and states not to not adjustments most of any equalize began particular, of improvement seeing

me let the news. with Services Virginia particularly discussion NET announce my the pleased I'm to Now, award finish contract. recent really some state of West of positive

state one for is Now, new a this completely us. contract

our one Furthermore, contracts also this have. contract the can the of by have is quarter, rebid end now contract share wins the and underpinned further won Georgia the months. through process have on under the the that of their a recently third performing and team and I twelve increased confidence Oklahoma of the both I expressed placing I that of opportunities also we Texas with great like for a start extend that you to terms of bidding and that learned pipeline emphasis will expect deal confidence the in We previously new

very little EBITDA. with compared revenue Now adjusted We There We million generated some impact WD Services slight the minimal to in just that of loss so five. our program work demonstrating was offerings. the efforts X.X operational XXXX. foreign see as are this adjustment now we're on numbers moving outside headwind, million underlying much The reflective quarter on EBITDA standard but our X.X we of to favorability wind legacy adjusted impact our in negative more in core quarter UK of UK there. did quarter and of related to a offsets are to diversification employability the new of profitability remains performance this to the down exchange, a this growth due page

running which continues the is to momentum new initially the to health mobilization addition, cost rate In build program, at a lower and program, with UK we than anticipated. work the work successor

new very years, UK also that mental awarded and Diabetes WD the market health combined two experienced share deliver four Our prevention large also employment program contracts in XX growth had preventative already to in health further build a strategic Prevention Services services with quarter. the the to on pleased are Program. I'm care in for positive related combined the QX to UK important related health These diabetes health over develop you was more another presence support. in and segments a million worth but

announced to related recent important as of that Program Justice contract. Offender of the providers referred The another the was to probation there services Ministry recently to Rehabilitation UK RRP. commonly just our development changes Now

about that to under the the frequency these measure of You may the related particularly entire recall contracts there concern across industry re-offending. penalties was around potential

While a of with we Bill's this terms in more it in in of the detail positive trigger record outlook a much as our does a a for us level continue the funding. this with recent work announcement will generating penalty offer Justice Ministry later, of period which to to and whole sustainable proactive contract going did quarter, describe

we finally, July. segment to report and during you first I'm also operations French helps related that during in Services our this to strategic quarter an business. agreement is to important closed subsequently related This to to reduce into very a of complexity which options one of entered step Now our review WD the happy the sell aspect

continuing now more report. make progress are In and definitive terms we keep to that we of the we when informed something we'll have broader review, shareholder can

focused coming of support originally volume earlier the be was structure put significant to and impact number actual volume on Now assessment stream. which higher small cost business on the had expanded to higher on longer preserve also healthcare offering originally services. of in the investment is driven on-boarding we volume. a QX to that Further our capacity the acquisition their lower equity primarily requirements. EBITDA term want team new on planned expected the to exasperating strong generate bringing Matrix, revenue growth first really in demand, the assessments, mobile by in XX% year Matrix the to clients half had indicated to lower organic touch this by is we the while lower the the assessment QX yet over assessment currently Matrix we in-home volume start while the largely mobile underlying mobile serve need than our recently is The saw with ability that the an contracts particular Matrix back - of this balancing a on investors place Investment, new for It than of now growth to not year. Matrix expected I was line due will of bit performance anticipated. a also we to emphasizing briefly in that revenue expected and in team a

Now, I'm summarizing my Matrix. comments on

in where want is investment of to short I there excellent strategic we performance fit setback that in the thesis holds combination While in term solid the term value terms as develop we near opportunities. the view significant see the an growth a generate membership one once of and to in medium to reemphasize HealthFair and cross selling Matrix start will and the in that financial increase HealthFair further

so rationale groundwork brief behind our organizational our announcement consolidation update in transition detail and Since for we've this the strategic we transition I'm a to Now finally, last continued very of plans. plan, our at talked going our lay building to process call the been recently length that you progress. on announced the out about on give

of of XXXX, line We Atlanta with functions expect our to to by and have timeline. of start fully holding the the second transition quarter company all LogistiCare of which original activities our the in is in

a As $XX previously XXXX, million. mentioned mid-year at of on that demonstrate basis savings run are confident least we we from will rate

extremely all transition this are opportunities focus further available significant open in to value to the our by and We excited our progressing on along core up shareholders opportunities us further creation for will sharpening be the to this for us LogistiCare. path our drive asset growth

call the back to I'm us you over Bill, the Now, to walk through financials. turning

William Severance

segments four you the as consolidated Starting four, results. NET presentation focus page in on with of NET QX on our commentary through revenue X.X% has to my Thanks XXXX the XXX.X Carter. on million. taken page increased Carter I'll already and start

new revenue million. As of one being X.X standard in new discussed contract is rule net basis. of reported a have the in we now the result reported recognition revenue The impact reduction a on a

margins for state and in increases significant on The contracts Florida York, a in and and for impact rate in are X.X% to no Virginia new certain ending contracts margin These shift membership X.X% Carter Texas. actions value in efforts the was QX of and and XXXX drivers territories reduced revenue the increase EBITDA the our growth primarily state contract Illinois by retroactive Connecticut has So in were retarget MCO enhancement last mix. change in presentation other our taking QX were upon Indiana QX revenue regions on The of New contract based including compared into year. key of as address well certain adjusted QX contracts offset we to recorded in review contracts basis, covered a of and MCO an key as Louisiana, XXXX EBITDA. several utilization. in were in X.X%. XXXX new apples-to-apples lower service state of and the to the Adjusted drivers revenue

past higher experience of transportation discussed, have term. utilization to leading negative in have we impact As a and/or we periods margins the the short costs on in

to improvement cost typically these shifts in rates the able However, we to in as we also an to have in experienced partner with past, customers margins resulting order in the utilization reflect long medium are in transportation term. and realign and to

and on As context, when we data expected set the rates, we partner with our to customers historical utilization leaning heavily cost. determine

address factors this of it and of increased impact. look Generally, couple result not XXXX However public Once policy temporary led was were trend new and decisions of the a to other fully increased had a in adjustment rate a truly reported multiple a continued decision a to much we we cost for QX see is services. seasonal In contracts period to large of XXXX. can of the crisis, utilization XXXX higher we including opioid A developed, will our a trend and/or to negotiate to change utilization quarters one ensure or able examples policy retrospective to due over state from in cost. in public highlight just behavior rates our and that which further.

MCO during example, XXXX another some and into significant entered new XXXX, contracts. we As

realign extent to contracts state were us we with fully the MCO. in it data cost to higher and number of trend we the discussions In to during is developed. our high; we resulting rates history on once the a after understand to have fully the utilization be XXXX, the in key XXXX, will our we across under ramped again realign are once by our had the cost. analyzing we higher based able than contracts originally As the able had drivers cost contracts, Them optimistic rates remain are developed. with QX fruitful seeing trend the order the higher was been with anticipated the customers costs are that To or the much XXXX, than in cost either

our our X% EBITDA operational laid in XXXX year to update, from we range. we X% for out the adjusted a As margin full low lowered outlook

we margin X% However, to view the long-term still in despite X%. target range of to the short-term for the be headwinds, NET

X% the year XXXX Our revenue which revenue of to is long-term X% growth estimate of full remains range, X% to below in X%. our growth rate target

decline or currency benefit work Moving the so X.X% revenue decline. from of small approximately expected, recognition was to five, The QX legacy rules. XXXX revenue WD new did including impact down XX.X was Services continue the million program. favorable revenue on movement, line as we from an on declined X.X% apples-to-apples in a basis the page XXXX revenue few UK

very across and with are the of we the with pleased positive contract results progress the together our Diabetes international US. Prevention businesses However,

to increase the continue work new gradual in health as this of also We up. program to ramps see contract a referrals under

For Offender of which changes, positive. the results are the impact spoke the of Rehabilitation about UK changes recent overall the Carter contract, very

recognition WD higher with margin to million EBITDA would The standard. anticipated X.X million we adjusted services penalty of loss better did the announcement incur again However, primarily timing of million we overall due to earn for the reported potentially puts the result our as in of X.X cohorts revenue it performance financial provide penalty to the in expect terminations is rate trends, of of us opportunity established to slightly once revenue. incremental EBITDA upon but we Based position current based compared the additional the a additional of the baseline. XXXX, recognition X% through year. upon than was contract in some compared to last which a Services' reoffending much $X.X for quarter new a adjusted the impacts

margin adjusted XXXX, approximately X%, expect impact Prior at impact which approximately expect the we we come EBITDA of of of an revenue For in full recognition rules. X%. new the margins to new the includes rules, the to year

to an Turning XXX,XXX increase in our significant in X.X EBITDA million than year. of corporate, was loss the X.X expense we driver The price. which prior settled to increase the an stock incurred is higher for of million in due QX adjusted XXXX, cash awards major

Additionally, to in of loss due company a significant history. had from QX release of reserves the of XXXX, our insurance captive claims benefit favorable we

lower. much Our gains captive and is runoff on now are actuarial such

costs cost. During QX of of XXX X.X XXXX, consolidation non-cash million we million incurred including organizational to related the

of program one approximately non-cash with is of representing million, current the cost total the Our X cost. estimate approximately third

year we For corporate the adjusted at we million. year and XXXX, between currently full of organizational million be negative XX still million consolidation the estimate cost, to expect EBITDA be approximately which to XXXX for X X excluding

ramp due is mobile running cost the the of in product delay receipt up membership of Matrix of Matrix revenue the assessments consolidate expectations support out is below for XX.X% acquisition or the assessments. and and don't six, an therefore investment primarily EBITDA in of we which as on to volumes, page to adjust equity Adjusted XXXX higher slower on in the its HealthFair remember to increased Providence. volumes. Turning page February Matrix information its due for thus a by of and as margins closed treated currently was for pro structure was acquisition from to court sized impacted over performed since only XX% Matrix and in-home million. slow QX of commenced results Revenue as EBITDA negatively increased revenue organically new the assessments, contracts customers assessment The XX.X well, list were ramp HealthFair of due very for XXXX, and In to six the of the contracts Matrix in acquisition none delivery mobile mobile business resulting a growing includes forma. offerings. part revenue information is

of pleased to Based new charge of of from expense ability LogistiCare 'XX related sight and acquisition. of driven to in the a costs, and a has do value is sale our depreciation this high of Now significant structure. million once want across fair of that want are board business. is which in we item From better accounting now gen full terms on recorded based I impairment in value the specific by QX Carter level and assets quickly sale, is of significant equity net of which in announced held Ingeus the of on part Ingeus touch in and touch for compared a the focused cash and increased actual synchronizing in expected development. X.X impairment to level due project. our an being demand about of the method of XXXX From Despite result closed due HealthFair quarter, XXXX cost perspective ramps France, EBITDA income is related at loss which A matrix on the upon the required to method LogistiCare to alternative statement QX preserving to very fairly came X.X expect the remainder he year, determined solvency this France, this lower the one to last quarter and improve volumes once the data market. transaction CTO assets the results was the the he management cost the the France compare proceeds we of the more margin business to applications the exit for efficient over charge I interest record other to has in and as charge. to the also an on the drove next team in due element, with We a perspective, to alignment One performed French the the the year, business which of and review developed. review, efficient not of million. a million to volume the aligning up in the the impairment scale integration structure spoke is of line July. a XXXX on, a was X.X income expected. on Providence of we amortization adjusted as the the an while

in with Moving page million the just ended cash debt. term XX we quarter under long nine, no with to

related position but Services receivables. impacts timing for Our working capital, cash our NET activities, buyback mainly to also negative reflects and WD

Our results the book has thesis HealthFair combined which a in service short XXX is below time value. is its Matrix the value not for the of produced market believe Even true acquisition, though approximately we million, since expected of assessments in-home rationale of of and sense. we healthcare compelling long-term mobile business strategic value in a of The incredibly complementary makes very remains offering and optimistic the ton remain synergistic for acquisition still services. these the and

Our share of count, for a basis we a which total of million, million. year-to-date quarter the shares XX.X an is XXX,XXX to on taking common plus million. as In purchased XXX,XXX preferred additional XX.X XX.X for was converted June shares purchases our

approximately XX Our current is capacity buyback million.

our extended facility XXXX. through million August twelve of an months additional we Finally, for credit X $XXX

of flexibility XXX provides Operator? to capacity, pursue to addition the Q&A. the borrowing now for with facility options. With line great up million that our the In strategic will us I open

Operator

Bob from Labick CJS Securities. Our comes question Instructions] - first [Operator

is Your open. line

Bob Labick

for little to thanks more it detail RRP contract, with just and and of the the the terrific Services, on if strategic French and play there. clarity the alternative a the the to stands does operations you and process wanted morning at WD expect all details how you out? Good that help where from start I how devastator all help this and highlighted

Carter Pate

in needs build a goal I to you. to the of of we I two would morning guess workforce of - there Good Bob. ladder were Thanks the on order path to the started basically strategic analogy legs down here. describe when development get our to use review I

strategic that. and an we hard was ladder that able with may significant the significant agreement limiting contribution The penalty was costs future first going if And you that ever employees and to were we're the pleased to is the like its makes the and limiting believe for sign last the of leg We've sale particular to of to down allow of unlocked contract really that forward. was division we that care that we France, have with wanted on down that. social protection that that, leg cost that French the all any That it what and to RRP health were going that minimal which deal of second working section move recall France to of most the part or of shut government then exposure. the very for dispose that nailing really we review of mandates been

tell are the and about I accumulate of pretty must We fact. and I'm some midst response the optimistic been that in you that. in able of detail encouraged to we've

in this as So optimistic more of the probably why I'm so time, important I RRP than about such an France have component as that been that's was some well contract.

Bob Labick

some what Okay, great. other and an helpful. around us some very update me, may LogistiCare, news give looking you're and That's CFO I for us? you that for for, color have how could for appreciate then the one on search that's progressing when you

Carter Pate

for David an has an and tuned on we've of is within have in a he transitioned be terrific that optimistic into here major choice office our of announcement a found able so consolidate in We now Officer been were several focus the was months through some well in think the Connecticut up David as list candidates. the you process Chief of this This ongoing and to Atlanta. Shackelton as I'm as has point thirty Transition that market, do to background effort and to CFO spearheading with is candidate, what our on look can been we'll days, that. The recall we that you have time checks, Most tell stay informed intensive taken I order that all Arizona person. that interviews, the the I am next of of narrowed

Bob Labick

super. Okay, much. very Thanks

Operator

to over to the back call There are remarks. closing turn any I no further questions. like Pate Carter for

Carter Pate

two you the that Thank appreciate my and hopefully some Thank a you are thank and in to of days the so in to about we're morning. your We're us call and interest. front and all excited on good much, have the quarters operator. of today. We in going front investors Listen, have shareholders us. coming news good encouraging

Operator

does conclude This you may today's all thank Everyone today's disconnect. have gentlemen conference. and for great day. program Ladies and you participating a in

ModivCare (MODV) 13 Aug 182018 Q2 Earnings call transcript