PRSC - Earnings call transcript Q3 2019

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Third Quarter 2019 Providence Service Corporation earnings conference call [Operator instructions]. I would now like to turn the conference over to Ms. Suzanne Smith, chief accounting officer. Please go ahead, ma'am.

Suzanne Smith

Thank you, operator. everyone. morning, Good Smith, Corporation, Suzanne XXXX Officer The of call This thanks Chief for Service and webcast. quarter joining Providence and is Accounting today's conference third officer Pate, With are our our and Officer. Kevin interim Chief me Financial Dotts, Carter chief today is who executive

that and under Form call, presentation Securities the to Commission and the of current Event which referencing members on we the found this management team Calendar be During be yesterday. our X-K, furnished will Exchange the the can investor website in

results Before is to we these company's would Reform certain Litigation statements Information under I regarding in management call, started, that statements or contained filings during materially. involve and uncertainties cause events like Securities make with everyone get other risks, the differ in factors Act. and to Those the statements press will factors, yesterday's today's forward-looking Private remind release which characterized SEC. as course the of the the actual company's may

We Form certain non-GAAP definition in in release, and information measures provide is measures will most GAAP also to and our measures investor to A non-GAAP these press comparable of within included discuss to an X-K. additional the investors. our effort reconciliation presentation financial

the Pate. will replay that, interim our Carter? numbers Finally, today's With approximately via call one which listed is Carter call which release. of we hour the within press I on for phone have will over arranged a CEO, or www.prscholdings.com, after call, our this be available turn our to website,

Carter Pate

call. for Suzanne, us and Providence's XXXX Well, thank earnings and thank you today everyone, morning, joining you, third-quarter good for

ongoing a about our allocation, and repurchase before a little search. I share just the quick on update capital jump specifically Now the into program bit CEO financials,

conducting purchased program, share be the were good we quarter, is we time contract use unable of Board remains of of for were million our re-pricing repurchase capital to supportive and very while the market a in we of the deployment. efforts, $X the worth period shares during Now a

hopeful to or QX. the progressing. Now search announcement QX is CEO an early make planned, we in are late And as possibly

moving and Now solid quarter growth of the of results a adjusted $XX.X year-over-year We a had had $XXX.X on EBITDA of million, XX.X% million. with to representing revenue financials.

for $X.XX. was EPS the adjusted Our quarter

weeks as X-K, our disclosed total Now results. a tax a retroactive million in contract successfully of renegotiated helped adjustments, gross greatly Form few $XX.X which ago from we benefit of these

of pricing, Now year. so results to far in that all impacted past, our we negatively effort look been discussed as this in particularly continue right-size the an to at those contracts have

real expect and contract Now I've mentioned conclude rest time before, as the beyond. in to take renegotiations fourth But quarter assured, more to opportunities on work re-pricing and these some continue even to we secure.

moving Now transportation on to expense.

are storm These demanding as perfect and of mentioned our providers markets, we and had minimum negatively rates last driving higher both wage year. results been higher our well which higher driving rates. external factors including what XXXX I described the as are in wage unemployment, financial As has are impact this our our many increases as seeing costs higher impacted We're quarter, rates. insurance transportation of lower external as transportation forces

must we to to and these beginning and, learn. lesson a react challenges changes. difficult quickly of say, the for the the centralize lost was to unfortunately, at level industry to compounded attempted were us it market connection These at operations when year industry the I oversight

of encouraged we some I'm positive signs, very to Now levels, including the we've date. level since metrics structure the have trip reinstating transportation progress average all operational the the to cost at per some by time our around the year. seen costs much first reducing local appropriate made for manage

what to on continue work we can. we controlling So

overcome without to external difficult the forces However, these belong. are passing costs

share, in ride We would U.S. largest about strong partners are we I for we certain of and their with and believe relationship note we Lyft. one a often that rides. the we ambulatory unique are quickly cost effectively asked very in contractual have As markets, services leverage certain

becoming we the are which impact trips. of on are that receptive Payers this and a quality new the increasingly of transportation environment payers importance it and experience, Now membership in understand network has healthy operating. completed

of margins year In we In state continue end these a local working light we below to headwinds, seen X% re-price to payers higher transportation to of industry-wide, with officials expect states, be have consistent of these costs. advocate transportation improvements. contracts for number approach the and for groups continued as with to providers we

the on of move thesis time the reservation the We passed a acquisition and as And just pack let's acquisition to carriers. lower reminder, contract Now productivity new which a at would was costs and increased the of circulation. there. investment one-year across drive anniversary system, our the

significantly platform offered at improved thing year, platform the of the more information technology They seek demand seeing personal The of in end by aimed anticipated. reporting take and health. new the is higher control These front empower than customer new their to to customers a The interested members we're platform. membership we that data after are for experience. interesting their

As mentioned on pilots, secured member and multiple last Medicare quarter, where focused are new quality payers much have we Advantage experience. more

of facilities as changing transportation, think value In to of plan with of its healthcare about to core perception which impacts the are and transportation of on nonemergency determinants. our Medicaid Medicaid benefit. largest the nonemergency within mandatory social local Medicaid many carve-out we states, a payers our one launch Even measure we're often a Medicaid market,

for improve application, the doctor. We are HIPAA which currently to greatly mobile a barriers developing trip will booking a the compliant

business. growth, lead to margins and the operational from existing LogistiCare acquired broad the a platform improved not new we the accelerate are lower future. separately we've to the structure learned product our technology. but that from go circulation a do believe focused offering customers will that market we one and continues LogistiCare, combined Likewise, in newly run interest And set as circulation in operate agnostic. we We embedded reminder, and offering accordingly as on cost stimulate Now customers to the

will new longer combined in state thought functional The to new LogistiCare platform migration. MCO and and On customers. demand, we many to workflow, requirements complex different structures number the platform the originally challenge back-end, existing certain take moving of product of bring prioritize which elements the to require certain a than contracts pricing as platform

this that new be opportunity we encouraged, the which key technology integrated a an We an to technology first is about growth entrant however, Now are are platform is front-end customers feel inquiring. within feature markets.

cost lead line to growth than more addition, margins. In operate expanded operators margins accretive the believe and market. Medicaid of markets will bottom low these much We at traditional the traditionally faster

still Given lead around right about or plus, contracts six large we for time the most is excited groundwork from we're are the now. laying anywhere months

So Matrix, I'm is on our of one to to move which equity investments. going

equity Now earnings for its equity of related the Matrix loss third in million quarter of Providence recorded $X.X to XXXX, investment. a

For was from XXXX, Matrix with and home the in visits. third Mobile million. membership quarter expectations. membership were $XX.X of third-quarter visits adjusted XXXX and and million benefited revenue $XX EBITDA higher-than-expected Matrix was line

mitigated. Compared reflecting capacity first adjusted to experienced XXXX, However, direct of constraints volume was the typical higher half. visit million, restricted to $X.X costs lower slightly per by of a third cost compared that stronger Matrix XXXX. have EBITDA decreased been quarter second indirect Matrix' and the seasonality our quarter since of

to turn with to I'm the Kevin over that, now. Kevin? call Now going

Kevin Dotts

Thanks, Carter.

wanted organizational on to that started, quarter. I I hit Before get the was last just consolidation completed

settled Excluding of year impact and EBITDA cash corporate over by for the year. backs corporate-related declined add purposes costs adjusted awards, of equity million $X.X

prior $XX.X Revenues to or Now in increased the for million financials the to Services. the in moving NET on compared year. third quarter $XXX.X million XX.X%

As $X.X Carter benefited million was the mentioned related reimbursements. a benefit inter-quarter from we Included to $XX.X previous million quarters, to adjustments. this was amount for remaining several million pickup earlier, related rate and in the $XX.X

in and longer and saw contracts MCO Minnesota state California. managed we revenue revenue by in West of well also new a growth Island increases the an contracts. no higher in partially as We see, care new contract from Rhode state These from our Virginia at-risk contracts as Louisiana in impact offset a and not were contract contract organization

for $XX.X certain costs, was which the million quarter, EBITDA $X.X the creating includes million Adjusted holding company. corporate of

margin. EBITDA a was Excluding company $XX.X X.X% million, costs, these adjusted holding which represents

transportation to higher Our be by continue quarterly results impacted expense.

the retroactive quarter, this transportation versus of this the experienced past quarter revenue of expense during revenue was quarter as impact a percentage XX.X% Excluding XX.X% XXXX. onetime in QX

through headwinds have of mentioned, a driving the operational transportation driving transportation building at aimed renegotiating across all industry almost a down at of several launched our is market expense, we confluence rates of Carter capacity up and combination increased level. level this, As rates To combat initiatives market network markets.

is with near through However, in way term move payers. we to the expect of a on needle percentage the renegotiations continued revenue the transportation cost as only

Capital allocation, sheet. balance

we repurchased mentioned, capital Moving our as stock. million on Carter common to allocation, $X of

while unable remains cash. to program, While We the contract were market a million share of of re-pricing $XX.X with repurchase were be the efforts. the in supportive quarter time of concluding we for the ended the Board we period

to cash over that, back We operating flow. the to generate capital turn With the fourth over Carter? we expect and will positive working quarter that expect call decrease I'll Carter.

Carter Pate

we At going so Thanks questions operator, have much. Okay. this we're any. to point, entertain some think if I

Operator

comment have We from from of CJS question Bob Securities. instructions] or the a [Operator line Labick

is open. line Your

Bob Labick

said little was earlier And strong far. re-price? are expand customers. to have on percent take? that hoping in bit in so with you first, you how I terms under you can you of versus very that congratulations speaks contracts So And the have way. percent long just Is today, on that could like have on re-priced much more relationships what believe re-pricing might obviously more the you the efforts the that where a efforts you you've re-pricing It of there bucket? your the you the

Carter Pate

coupled try many own perfect this That and wage, that the this an self-inflicted here. all-time operate on state a we faced. I got our of guess then kick year, about these unemployment the providers the minimum Kevin, storm Bob, into I'll low we insurance that quite states Well, calls bit mandatory in that with this have of our the, and wage start talked of many has off an to issue we in, increases, environment

and with to can own our I has self-inflicted see the talked what contract do. have That last single we gone that call. you And on issues every pulled cannot we extensively tell methodically, and that we coupled would

we that things the probably type to to that I have clients. our this are contracts them. that that we together pipeline that To the adjustment, eight company one answer is got these more is that's relationships regarding some rate increase question, in the pull recall, get had for we've and -- a to response revenue currently facts six tremendous the of of with your our of The directly strength solid relationships, as from

apple the when this those you do that brand-new call, are normally this. know For just you that at you of one get to many bite

quickly So in going is year too overreacting for smart not and and a rate increase place. asking probably back a fiscal the

and we let usually So it facts for settle with out, we meeting play accumulate down, then the clients. our go we this see the

So gives quarter. last begun Kevin, the you an hopefully, there? that of also question quarter to go lifting that on like will else you for Bob's this anything has already just would add and idea

Kevin Dotts

No, no.

that's think I right, Carter.

I quarter. now, the in would about they're contract think are six say here or negotiations definitely there's that if right those successfully. the fourth five I I'd will we quarter impact say, of finishing concluded up

more event. others a The XXXX will be of

there be will things probably based nature. recent of also that on that up will some and margin so reviews several And more be picked

XXXX. and impact, in think have quarter I fourth correct. So some will be that's We'll some

Bob Labick

And top then next about I view X% year drivers year? know Where just growth line talk in about some term, are the behind over for what could that? of drivers? X% longer preliminary see about the for opportunity. talked talking growth the to trending next do you -- you we've And the the

Kevin Dotts

the $XX Bob million actually that $XX somewhat I now. million already not new total $XX when have for will next worth of caution to at penned, say, that penned, on growth occur. be $XX million So business I'd be would million we're actually the only That's that say, right installs will looking number. based I year. that we've already to We've would

that So that as the budget quarter. on fact through would several I in process. the say, penned our of be ones working through feel we've more go have we're bullish right growth the we these throughout penned pipeline that already next the for will kind here pretty year we and now cycle given

Carter Pate

significant us talked this at got I'm actions feeling team States. sales in uptick that a I Kevin about renewed Bob, really and in just literally wins core the Ari occurred came urgency She's some in good been a about been the ago, the in seen here, here the she's along sales you energy that and organization, wins effort joined platform. in of point three everywhere that have just tell coming would a she's there's and about, we've of interest. months, on are months just just renewed months a have that terrific last and some and pile new activity the and here. who some four in the four with members that and of integrated amazing with sense that purpose United got And here people organization

So feeling here shape side. we're wins growth recently. those think like I have good. in pretty sales we're in And we And on good come that the

Bob Labick

next little a we've at you've for margin about the core LogistiCare and or that still industry-wide highlighted costs? Can back I taking X%, are Is obviously potentially of on taken getting to on in about you've And the the X% thoughts of some for to and address actions XXXX, the kind calls, year? you're reasonable a margins like the talked those. industry prior level. plus transportation the talk changes action we think taking bit costs transportation given potentially target

Kevin Dotts

So way. this Bob, I say it would

we we're efforts, all I things like seeing transportation seeing the are down. cost overrides think that for come

what cost year little X%. a positive I to get bit hunt the beginning year. next details. in seeing But not That'll the be favorably. we're are for mileage, Sometimes, too we to it's into be offset And a our, event so by for ultimate we think the going is next trend think to far

Bob Labick

And longer term... then just

Carter Pate

clearly It's clearly focus. a a Bob. focus, It's

get the to the heart changes of refocus the that on hit the to the that some made You of team leadership overcoming to this year headwinds question, right all and margin. that are designed

weak us. cash the So year. industry, And transport tough something these these are as rest not the take issues to that right got recover it's high sheet, a to we ability bar are some is lightly. balance growth got known take help the the of of The industry. margin going and demand best we've we in strongest are the We've to negotiations like And ground costs. well-known position our lot to none that have that we had now next recover, I our competitors that But and we well position.

to interrupt Sorry you, though.

Bob Labick

And for then maybe one last me.

savings? still of back-end in to cost to about set savings a of putting time how get over taking I the a potentially one circulation And term. million on some do out in horizon Obviously, you or little was the the offering longer market X% like time. $XX taking few you Just sticking, taking know I talked think the initially, get now. it you're next little it to the margins of to and expectation the longer, million and integration out for over grow it's but a may that believe opportunity materially in to minute, million maybe of $XX years north margins the those be $XX

Carter Pate

then want take Kevin, and do you that, I'll? to

Kevin Dotts

we believe It a about, margin may can sustainable we talked we take the get to the, that X.X%. think rates those bit little I that longer.

there going the it's get of think seeing, ties growth. kind perspective question, on think back what from we to it I that, the and we're Bob, previous to of and more

are poor of there's interest of us We have growth we've Advantage I business kind would Medicare are million it getting, been already of and better that seeing $XXX this lot we player some in, probably, kind in the out platform, circulation of kind Medicaid in worth of say, gets year. now and than a got that of we

our is coming at happen in structure. less, bottom cost and free with with it, to think that drop we're bottom sustained we going of call I growth going see the I really And expanding what to will line. sustained see, growth So will then forward what leverage call, margin line,

from, going So we we coming a those I cost I call to forward. but less margin get structure bit X% as growth it be it, that will with it's think rates, as to well longer, more think, may come as, growth go little

Carter Pate

Kevin I well. said think it

Operator

time. queue for like this remarks. the no to over Carter closing the I'd turn conference additional at back Pate showing any questions to I'm in

Carter Pate

we've that We're trying Thank with for months. This to you would CEO. the shareholders. new I to is looking in that this actively progress you, coming my tell made likely most a the on likely most call. a is bring conclusion last

order I've your you years that so coming reestablish work third I've your quarter. forward team hope two to Thanks in enjoyed Bye-bye. lot in of a days. pulled you to for here margin the together interim. saw much support talking in progress hard been as And the and I to the look our the

Operator

this call. Thank you conference and today's Ladies concludes for gentleman participating.

You disconnect. now may

ModivCare (MODV) 9 Nov 192019 Q3 Earnings call transcript