Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - ModivCare Inc | d8k.htm |
Exhibit 99.1
PROVIDENCE SERVICE CORPORATION
| AT THE COMPANY | AT CAMERON ASSOCIATES | |||
| Fletcher McCusker – Chairman and CEO | Alison Ziegler 212-554-5469 | |||
| 520/747-6600 |
FOR IMMEDIATE RELEASE
Providence Service Corporation Reports Record 2010 Results
Anticipated Debt Refinancing to be Led by Bank of America and SunTrust Bank
Highlights:
| • | Revenue increased approximately 10% in 2010 to a record $880 million |
| • | Diluted EPS of $0.33 for the fourth quarter; 2010 full year EPS a record $1.78 |
| • | Cash from operations totaled $44.0 million for 2010 |
| • | Total debt reduction of approximately $21.9 million in 2010 |
TUCSON, ARIZONA –March 9, 2011 — The Providence Service Corporation (Nasdaq: PRSC) today announced its financial results for the fourth quarter and year ended December 31, 2010. 2010 was a record year in revenue and earnings driven by Medicaid enrollment increases and the expansion of the Company’s non-emergency transportation (NET) services segment.
Fourth Quarter 2010 Results
For the fourth quarter of 2010, the Company reported revenue of $219.3 million, an increase of 1.7% from $215.6 million for the comparable period in 2009. Revenue from Providence’s NET services segment grew 4.8% to $136.3 million in the fourth quarter from the prior year period. Revenue from the social services segment was $83.0 million, down from $85.6 million in 2009. The Company experienced increased year over year Medicaid enrollment with the NET division benefitting from continued membership increases related to new and existing contracts.
Net income was $4.3 million, or $0.33 per diluted share, in the fourth quarter of 2010 compared to net income of $5.6 million, or $0.42 per diluted share, in the fourth quarter of 2009. Results in 2009 benefitted from a salary and bonus freeze and decreased stock based compensation awards.
Providence’s direct client census was approximately 58,100 at December 31, 2010, compared to approximately 54,700 at September 30, 2010 and 62,200 at December 31, 2009. The year over year census decline was primarily related to a decline in workforce development clients. The Company had approximately 8.2 million individuals eligible to receive services under its NET contracts at December 31, 2010 compared to 8.4 million at September 30, 2010 and 7.7 million at December 31, 2009. Direct contracts numbered 704 at December 31, 2010 down from 734 at December 31, 2009 primarily due to certain contract consolidations, which led to a decrease of 37 contracts in 2010.
Full-Year 2010 Results
For the full year, revenue increased 9.8% to $879.7 million from $801.0 million in 2009. Revenue from Providence’s social services segment increased 0.3% to $341.9 million in 2010 from the prior year and revenue from its NET services segment grew 16.8% to $537.8 million in 2010 from 2009. Net income increased 11.8% to $23.6 million, or $1.78 per diluted share, for the year ended December 31, 2010 from net
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64 E. Broadway Blvd. • Tucson, Arizona 85701 •Tel 520/747-6600 •Fax 520/747-6605 •www.provcorp.com
Providence Service Corporation
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income of $21.1 million, or $1.60 per diluted share, for the year ended December 31, 2009. Earnings for 2010 benefited from continued growth in revenue and lower than anticipated utilization and unit cost to provide NET transportation services as well as a decline in interest expense compared to the year ago period. Included in 2009 was the $1.4 million ($0.11 per diluted share) non-recurring tax benefit which combined with a changing state income tax mix led to an increase in the tax rate from 36.6% in 2009 to 42.8% in 2010.
At December 31, 2010, the Company had cash and cash equivalents of $61.3 million. During 2010, the Company generated a total of $44.0 million in cash from operations and repaid $21.9 million of total debt.
The Company has retained Bank of America and SunTrust Bank in connection with an expected senior debt facility refinancing. The Company expects to close on the transaction in the first quarter of 2011 and anticipates that the interest rate on the new senior debt facility will initially decrease by approximately 300 basis points. In connection with the refinancing, the Company expects to record a non-cash charge of approximately $2.4 million relating to the write-off of unamortized deferred financing fees and will expense approximately $0.4 million in anticipated refinancing related costs.
“It was a truly remarkable year,” stated Fletcher McCusker, Chairman and CEO. “Our alternative home and community based service model has never been more in demand as states grapple with lower levels of funding with the expiration of the Federal stimulus and are forced to do more with less. As a result, we expect to see increased utilization of our services in our social services segment in 2011, in line with historic organic growth in the mid single digits. This is in spite of state budget deficits and the ever present dialogue about how to deal with the continuing growth of Medicaid. In our NET division, our win rate remains good and we have seen some benefit from diversification in certain markets. Our strong financial performance has resulted in dramatically reduced leverage and should allow us to refinance the remaining balance of our senior debt and lower our interest rate.”
“Looking into 2011 and beyond, we see opportunities to further diversify our business and will continue to position our company to benefit from the anticipated 33% increase in eligible Medicaid members in the year 2013 when certain provisions of recent health care reform legislation are expected to become effective and community based services are expected to become mandatory.”
Guidance
Providence anticipates revenue for the first quarter of 2011 to be in a range of $220 to $230 million, with diluted earnings per share forecasted to be between $0.34 and $0.36. This includes the impact of the Company’s anticipated refinancing, including the anticipated non-cash write-off of deferred financing costs of approximately $2.4 million and the expensing of approximately $0.4 million in anticipated refinancing related costs. This compares to revenue of $221 million and diluted earnings per share of $0.66 in the first quarter of 2010.
For the second quarter of 2011, revenue is anticipated to be in a range of $225 to $235 million with diluted earnings per share forecasted to be between $0.40 and $0.42. This compares to revenue of $222 million and diluted earnings per share of $0.54 in the second quarter of 2010.
Providence anticipates providing guidance for the full year 2011 in late Q2 or early Q3, subsequent to the completion of the Company’s Social Services segment contract renewal cycle. However, for the first six months of 2011, the Company anticipates direct operating income margin in its Social Services segment to be consistent with 2010 levels, and operating income margin from its NET segment to decline approximately 200 basis points as a function of enrollment trends and a more competitive pricing environment. In addition, the Company anticipates its tax rate to be 42.5%.
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Providence Service Corporation
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Conference Call
Providence will hold a conference call at 11:00 a.m. EST (9:00 a.m. Arizona and MST and 8:00 a.m. PST) Thursday, March 10, 2011, to discuss its financial results and corporate developments. Interested parties are invited to listen to the call live over the Internet at http://investor.provcorp.com or http://www.earnings.com. The call is also available by dialing (888) 680-0879 or for international callers (617) 213-4856 and by using the passcode 62631529. Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PHRQNEJCE. Pre-registrants will be issued a pin number to use when dialing into the live call which will provide quick access to the conference by bypassing the operator upon connection.
A replay of the teleconference will be available on http://investor.provcorp.com and http://www.earnings.com. A replay will also be available until March 17, 2011 by dialing (888) 286-8010 or (617) 801-6888, and using passcode 47093609.
About Providence
The Providence Service Corporation, through its owned and managed entities, provides home and community based social services and non-emergency transportation services management to government sponsored clients under programs such as welfare, juvenile justice, Medicaid and corrections. Providence does not own or operate beds, treatment facilities, hospitals or group homes, preferring to provide social services in the client’s own home or other community setting. It provides its non-emergency transportation services management through local transportation providers rather than owning its own fleet of vehicles. The Company provides a range of services through its direct entities to approximately 58,100 clients through 704 active contracts at December 31, 2010, with an estimated 8.2 million individuals eligible to receive the Company’s non-emergency transportation services. Combined, the Company has an approximately $1 billion book of business including managed entities.
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,” “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 ability to refinance our existing debt, the global credit crisis, capital market conditions, the implementation of the healthcare reform law, 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, 2009. 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.
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Providence Service Corporation
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The Providence Service Corporation
Consolidated Statements of Income
(in thousands except share and per share data)
| Three months ended December 31, |
Year ended December 31, |
|||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Revenues: |
||||||||||||||||
| Home and community based services |
$ | 70,675 | $ | 72,482 | $ | 292,735 | $ | 289,007 | ||||||||
| Foster care services |
8,710 | 9,728 | 35,548 | 37,284 | ||||||||||||
| Management fees |
3,618 | 3,429 | 13,638 | 14,447 | ||||||||||||
| Non-emergency transportation services |
136,263 | 130,007 | 537,776 | 460,275 | ||||||||||||
| 219,266 | 215,646 | 879,697 | 801,013 | |||||||||||||
| Operating expenses: |
||||||||||||||||
| Client service expense |
70,097 | 70,360 | 289,152 | 275,126 | ||||||||||||
| Cost of non-emergency transportation services |
123,000 | 116,407 | 474,128 | 415,300 | ||||||||||||
| General and administrative expense |
11,721 | 10,855 | 46,461 | 44,010 | ||||||||||||
| Depreciation and amortization |
3,224 | 3,106 | 12,652 | 12,852 | ||||||||||||
| Total operating expenses |
208,042 | 200,728 | 822,393 | 747,288 | ||||||||||||
| Operating income |
11,224 | 14,918 | 57,304 | 53,725 | ||||||||||||
| Other (income) expense: |
||||||||||||||||
| Interest expense |
3,893 | 4,828 | 16,268 | 20,798 | ||||||||||||
| Interest income |
(67 | ) | (91 | ) | (256 | ) | (366 | ) | ||||||||
| Income before income taxes |
7,398 | 10,181 | 41,292 | 33,293 | ||||||||||||
| Provision for income taxes |
3,063 | 4,630 | 17,665 | 12,167 | ||||||||||||
| Net income |
$ | 4,335 | $ | 5,551 | $ | 23,627 | $ | 21,126 | ||||||||
| Earnings per share: |
||||||||||||||||
| Basic |
$ | 0.33 | $ | 0.42 | $ | 1.79 | $ | 1.61 | ||||||||
| Diluted |
$ | 0.33 | $ | 0.42 | $ | 1.78 | $ | 1.60 | ||||||||
| Weighted-average number of common shares outstanding: |
||||||||||||||||
| Basic |
13,213,262 | 13,151,652 | 13,194,226 | 13,130,092 | ||||||||||||
| Diluted |
13,317,370 | 13,246,842 | 14,964,516 | 13,211,393 | ||||||||||||
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Providence Service Corporation
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The Providence Service Corporation
Consolidated Balance Sheets
(in thousands except share and per share data)
| December 31, | ||||||||
| 2010 | 2009 | |||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 61,261 | $ | 51,157 | ||||
| Accounts receivable-billed, net of allowance of |
75,846 | 80,458 | ||||||
| Accounts receivable—unbilled |
266 | 330 | ||||||
| Management fee receivable |
5,840 | 7,160 | ||||||
| Other receivables |
3,930 | 4,118 | ||||||
| Restricted cash |
7,314 | 8,154 | ||||||
| Prepaid expenses and other |
15,478 | 12,440 | ||||||
| Deferred tax assets |
1,633 | 3,558 | ||||||
| Total current assets |
171,568 | 167,375 | ||||||
| Property and equipment, net |
16,401 | 11,166 | ||||||
| Goodwill |
113,783 | 113,673 | ||||||
| Intangible assets, net |
66,442 | 73,963 | ||||||
| Restricted cash, less current portion |
9,080 | 5,942 | ||||||
| Other assets |
9,659 | 10,988 | ||||||
| Total assets |
$ | 386,933 | $ | 383,107 | ||||
| Liabilities and stockholders’ equity |
||||||||
| Current liabilities: |
||||||||
| Current portion of long-term obligations |
$ | 18,113 | $ | 17,481 | ||||
| Accounts payable |
2,888 | 4,011 | ||||||
| Accrued expenses |
33,551 | 33,390 | ||||||
| Accrued transportation costs |
41,869 | 40,907 | ||||||
| Deferred revenue |
5,374 | 8,347 | ||||||
| Interest rate swap |
— | 372 | ||||||
| Reinsurance liability reserve |
11,898 | 12,645 | ||||||
| Total current liabilities |
113,693 | 117,153 | ||||||
| Long-term obligations, less current portion |
164,190 | 186,732 | ||||||
| Other long-term liabilities |
8,721 | 5,144 | ||||||
| Deferred tax liabilities |
11,580 | 11,740 | ||||||
| Total liabilities |
298,184 | 320,769 | ||||||
| Commitments and contingencies |
||||||||
| Stockholders’ equity: |
||||||||
| Common stock: Authorized 40,000,000 shares; |
14 | 14 | ||||||
| Additional paid-in capital |
172,540 | 170,551 | ||||||
| Retained deficit |
(78,501 | ) | (102,128 | ) | ||||
| Accumulated other comprehensive loss, net of tax |
(881 | ) | (1,676 | ) | ||||
| Treasury stock, at cost, 619,768 shares |
(11,384 | ) | (11,384 | ) | ||||
| Total Providence stockholders’ equity |
81,788 | 55,377 | ||||||
| Non-controlling interest |
6,961 | 6,961 | ||||||
| Total stockholders’ equity |
88,749 | 62,338 | ||||||
| Total liabilities and stockholders’ equity |
$ | 386,933 | $ | 383,107 | ||||
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Providence Service Corporation
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The Providence Service Corporation
Consolidated Statements of Cash Flows
(in thousands)
| Year ended December 31, |
||||||||
| 2010 | 2009 | |||||||
| Operating activities |
||||||||
| Net income |
$ | 23,627 | $ | 21,126 | ||||
| Adjustments to reconcile net income to net cash |
||||||||
| Depreciation |
4,953 | 4,690 | ||||||
| Amortization |
7,699 | 8,162 | ||||||
| Amortization of deferred financing costs |
2,446 | 2,979 | ||||||
| Provision for doubtful accounts |
4,899 | 4,479 | ||||||
| Deferred income taxes |
1,369 | 2,299 | ||||||
| Stock based compensation |
1,694 | 302 | ||||||
| Excess tax benefit upon exercise of stock options |
(66 | ) | (140 | ) | ||||
| Other |
88 | 109 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Billed and unbilled accounts receivable |
29 | (10,543 | ) | |||||
| Management fee receivable |
1,320 | 542 | ||||||
| Other receivables |
97 | (1,110 | ) | |||||
| Restricted cash |
5 | 112 | ||||||
| Prepaid expenses and other |
(3,388 | ) | 3,006 | |||||
| Reinsurance liability reserve |
1,512 | 4,115 | ||||||
| Accounts payable and accrued expenses |
(906 | ) | 7,047 | |||||
| Accrued transportation costs |
961 | 8,856 | ||||||
| Deferred revenue |
(3,011 | ) | 4,886 | |||||
| Other long-term liabilities |
697 | 184 | ||||||
| Net cash provided by operating activities |
44,025 | 61,101 | ||||||
| Investing activities |
||||||||
| Purchase of property and equipment, net |
(10,266 | ) | (3,699 | ) | ||||
| Acquisition of businesses, net of cash acquired |
— | (1,038 | ) | |||||
| Acquisition of management agreement |
— | (100 | ) | |||||
| Restricted cash for contract performance |
(2,304 | ) | (1,197 | ) | ||||
| Purchase of short-term investments, net |
(120 | ) | (194 | ) | ||||
| Collection of notes receivable |
— | 600 | ||||||
| Net cash used in investing activities |
(12,690 | ) | (5,628 | ) | ||||
| Financing activities |
||||||||
| Proceeds from common stock issued pursuant to |
471 | 150 | ||||||
| Excess tax benefit upon exercise of stock options |
66 | 140 | ||||||
| Repayment of long-term debt |
(21,909 | ) | (33,545 | ) | ||||
| Debt financing costs |
(61 | ) | (802 | ) | ||||
| Capital lease payments |
(13 | ) | (70 | ) | ||||
| Net cash used in financing activities |
(21,446 | ) | (34,127 | ) | ||||
| Effect of exchange rate changes on cash |
215 | 447 | ||||||
| Net change in cash |
10,104 | 21,793 | ||||||
| Cash at beginning of period |
51,157 | 29,364 | ||||||
| Cash at end of period |
$ | 61,261 | $ | 51,157 | ||||
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