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Exhibit 99.1

 

AT THE COMPANY                                                                                                                                                                AT CAMERON ASSOCIATES

Robert Wilson – Chief Financial Officer                                                                                                                               Alison Ziegler     212/554-5469

520/747-6600

 

FOR IMMEDIATE RELEASE

 

                Providence Service Corporation Reports Q3 2013 Results

 

Third Quarter Highlights:

 

Net income rose to $3.5 million

 

Diluted EPS increased to $0.25

 

Adjusted EBITDA was $11.7 million

 

Quarter benefitted from improved NET margins

 

TUCSON, ARIZONA – November 6, 2013 -- The Providence Service Corporation (Nasdaq: PRSC) today announced its financial results for the third quarter ended September 30, 2013.

 

For the third quarter of 2013, the Company reported revenue of $276.7 million, a decrease of 1% from $280.3 million in the comparable period of 2012. Revenue from Providence’s Non-emergency Transportation (NET) services segment decreased 2% to $192.0 million in the third quarter from $196.3 million in the prior year period. The decrease was due primarily to the transition of the Connecticut contract from “at risk” to “administrative services only”, and the voluntary termination of the Wisconsin contracts effective July 31, 2013. This decrease was partially offset by increased revenue related to continued expansion in California, membership growth in the New York City administrative contracts, and favorable rate adjustments in other states. Revenue from the Human Services segment, formerly known as the Social Services segment, increased 1% to $84.7 million from $84.0 million in the third quarter of 2012, primarily related to the impact of a new workforce development contract in Wisconsin which began in 2013.

 

Net income was $3.5 million, or $0.25 per diluted share, in the third quarter of 2013 compared to net income of $1.2 million, or $0.09 per diluted share in the prior year period. The increase in net income was due primarily to improved margins in the NET Services segment. In addition, the results for third quarter of 2012 included an asset impairment charge of approximately $2.5 million, before taxes, related to our Canadian operations. EBITDA (non-GAAP) for the third quarter of 2013 was $11.2 million compared to $9.0 million in the same period last year. Adjusted EBITDA (non-GAAP) for the third quarter of 2013 was $11.7 million compared to $11.5 million in the same period last year. A reconciliation of net income to EBITDA and Adjusted EBITDA is presented below.

 

The Company had approximately 16.0 million individuals eligible to receive services under its NET contracts at September 30, 2013, an increase of 8% from approximately 14.8 million at September 30, 2012. Providence’s direct Human Service client census was approximately 55,700, up 9% from 50,900 at September 30, 2012. 

 

For the first nine months of 2013, the Company reported revenue of $845.8 million, an increase of 3% from $819.4 million in the first nine months of 2012. Revenue from Providence’s NET services segment grew 6% to $583.0 million in the first nine months of 2013 from $549.8 million in the prior year period. Revenue from the Human Services segment decreased 2% to $262.8 million, down from $269.5 million in the first nine months of 2012.

 

—more—

 

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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Net income was $16.1 million, or $1.17 per diluted share, in the first nine months of 2013. This is an increase from net income of $5.6 million, or $0.42 per diluted share, in the first nine months of 2012. EBITDA (non-GAAP) for the first nine months of 2013 was $43.2 million, representing a 59% increase from $27.2 million in the same period last year. Adjusted EBITDA (non-GAAP) for the first nine months of 2013 was $44.2 million, representing an increase of 46% from $30.3 million in the same period last year. A reconciliation of net income to EBITDA and Adjusted EBITDA is presented below.

 

During the first nine months of 2013, the Company generated a total of $45.7 million in cash from operations.  At September 30, 2013, the Company had unrestricted cash and cash equivalents of $91.1 million as well as approximately $142.3 million available for borrowing under the recently amended and restated senior secured credit facility. Long-term obligations at September 30, 2013 were $123.5 million.

 

“We continue to show solid financial results year to date in 2013,” said Warren Rustand, Chief Executive Officer. “Growth and profitability were driven by our NET Services segment, which is benefitting from the full period impact of new contract awards that began during 2012, as well as the termination of, or changes to, contracts that were not meeting our financial expectations.”

 

“Our Human Services segment experienced modest revenue growth in the third quarter due to a new workforce development contract that started up in 2013, as well as stabilization of the business following contract terminations related to our Canadian and tutoring businesses. We will continue to focus our attention on expanding and improving the performance of our Human Services segment through operating efficiencies and both organic and acquisitive growth.”

 

“Overall, we are pleased with the progress the Company has made in 2013 to date and remain committed to initiatives that we set forth at the beginning of the year, primarily related to improving efficiencies. As we look toward 2014 and beyond, we continue to believe that the impact of Medicaid expansion under the Affordable Care Act will create opportunities for us to serve a substantially larger population of currently underserved citizens. Beyond Medicaid expansion, we continue to believe that general health care market trends, which include growing awareness of the need to coordinate physical and behavioral health care services and the importance of facilitated non-emergency access to preventative services, will position Providence to benefit from systemic market changes in the future.”

 

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 November 7, 2013 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. The call is also available by dialing (800) 510-0146 or for international callers (617) 614-3449 and by using the passcode 94634423. A replay of the teleconference will be available on http://investor.provcorp.com. A replay will also be available until November 14, 2013 by dialing (888) 286-8010 or (617) 801-6888, and using passcode 49143112.

 

About Providence

The Providence Service Corporation provides or manages the delivery of home and community based human services and NET management services to primarily government sponsored clients under programs such as welfare, juvenile justice, Medicaid and corrections. Providence is unique in that it provides or manages its human services primarily in the client’s own home or in community based settings rather than in hospitals or other treatment facilities and provides its NET management services through local transportation providers rather than an owned fleet of vehicles. The Company provides a range of services through its direct entities to approximately 55,700 clients at September 30, 2013, with approximately 16.0 million individuals eligible to receive the Company's non-emergency transportation services. The Company had over $1.1 billion in revenues in 2012.

 

Non-GAAP Presentation

In addition to the financial results prepared in accordance with US generally accepted accounting principles (GAAP) provided throughout this press release, the Company has provided EBITDA and Adjusted EBITDA, non-GAAP measurements, which present its earnings on a pro forma basis. Providence’s management utilizes these non-GAAP measurements as a means to measure overall operating performance and to better compare current operating results with other companies within its industry. Details of the excluded items and a reconciliation of the non-GAAP financial measures to the most comparable GAAP financial measure are presented in the table below. The non-GAAP measures

 

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Providence Service Corporation

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do not replace the presentation of our GAAP financial results. The Company has provided this supplemental non-GAAP information because the Company believes it provides meaningful comparisons of the results of Providence’s operations for the periods presented in this press release. The non-GAAP measures are not in accordance with, or an alternative for, GAAP and may be different from non-GAAP measures used by some other companies.

 

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believe,” “demonstrate,” “expect,” “estimate,” “forecast,” “anticipate,” “should” and “likely” and similar expressions identify forward-looking statements. In addition, statements that are not historical should also be considered forward-looking statements. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of the date the statement was made. Such forward-looking statements are based on current expectations that involve a number of known and unknown risks, uncertainties and other factors which may cause actual events to be materially different from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, the global credit crisis, capital market conditions, the implementation of the healthcare reform law, state budget changes and legislation and other risks detailed in Providence’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2012. 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.

 

 

 

 

—financial tables to follow—

 

 
 

 

 

Providence Service Corporation

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The Providence Service Corporation

Consolidated Statements of Income 

(in thousands except share and per share data)

(UNAUDITED)

 

   

Three months ended

September 30,

   

Nine months ended

September 30,

 
   

2013

   

2012

   

2013

   

2012

 

Revenues:

                               

Human services

  $ 84,702     $ 83,950     $ 262,809     $ 269,526  

Non-emergency transportation services

    192,011       196,335       583,028       549,844  
      276,713       280,285       845,837       819,370  
                                 

Operating expenses:

                               

Client service expense

    76,881       73,462       228,695       230,200  

Cost of non-emergency transportation services

    177,049       183,248       536,664       520,866  

General and administrative expense

    11,082       12,069       36,265       38,599  

Asset impairment charge

    -       2,506       492       2,506  

Depreciation and amortization

    3,725       4,018       11,188       11,254  
                                 

Total operating expenses

    268,737       275,303       813,304       803,425  
                                 

Operating income

    7,976       4,982       32,533       15,945  
                                 

Other (income) expense:

                               

Interest expense

    1,916       1,990       5,407       5,806  

Loss on extinguishment of debt

    525       -       525       -  

Interest income

    (40 )     (25 )     (92 )     (109 )
                                 

Income before income taxes

    5,575       3,017       26,693       10,248  
                                 

Provision for income taxes

    2,048       1,859       10,612       4,631  
                                 

Net income

  $ 3,527     $ 1,158     $ 16,081     $ 5,617  
                                 

Earnings per share:

                               

Basic

  $ 0.26     $ 0.09     $ 1.20     $ 0.42  

Diluted

  $ 0.25     $ 0.09     $ 1.17     $ 0.42  
                                 

Weighted-average number of common shares

                               

outstanding:

                               

Basic

    13,674,467       13,263,826       13,411,204       13,277,191  

Diluted

    14,049,329       13,342,614       13,711,124       13,388,355  

 

—more—

 

 
 

 

 

Providence Service Corporation

Page 5

 

 

The Providence Service Corporation

Consolidated Balance Sheets 

(in thousands except share and per share data)

 

   

September 30,

2013

   

December 31,

2012

 

Assets

 

(Unaudited)

         

Current assets:

               

Cash and cash equivalents

  $ 91,103     $ 55,863  

Accounts receivable, net of allowance of $4.4 million for

               

2013 and $3.7 million for 2012

    91,245       98,628  

Management fee receivable

    2,309       2,662  

Other receivables

    1,683       1,920  

Restricted cash

    3,837       1,787  

Prepaid expenses and other

    19,577       14,807  

Deferred tax assets

    130       532  

Total current assets

    209,884       176,199  

Property and equipment, net

    30,886       30,380  

Goodwill

    113,345       113,915  

Intangible assets, net

    44,250       49,651  

Restricted cash, less current portion

    14,198       10,953  

Other assets

    12,318       10,639  

Total assets

  $ 424,881     $ 391,737  

Liabilities and stockholders' equity

               

Current liabilities:

               

Current portion of long-term obligations

  $ 47,500     $ 14,000  

Accounts payable

    4,543       4,569  

Accrued expenses

    48,766       32,976  

Accrued transportation costs

    56,410       61,316  

Deferred revenue

    5,263       7,055  

Reinsurance liability reserve

    13,159       12,713  

Total current liabilities

    175,641       132,629  

Long-term obligations, less current portion

    76,000       116,000  

Other long-term liabilities

    15,736       13,527  

Deferred tax liabilities

    11,683       10,894  

Total liabilities

    279,060       273,050  

Commitments and contingencies

               

Stockholders' equity:

               

Common stock: Authorized 40,000,000 shares; $0.001 par value; 14,426,603 and 13,785,947 issued and outstanding (including treasury shares)

    14       14  

Additional paid-in capital

    192,547       180,778  

Accumulated deficit

    (36,998 )     (53,079 )

Accumulated other comprehensive loss, net of tax

    (1,155 )     (893 )

Treasury stock, at cost, 952,776 and 928,478 shares

    (15,548 )     (15,094 )

Total Providence stockholders' equity

    138,860       111,726  

Non-controlling interest

    6,961       6,961  

Total stockholders' equity

    145,821       118,687  

Total liabilities and stockholders' equity

  $ 424,881     $ 391,737  

 

—more—

 

 
 

 

 

Providence Service Corporation

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The Providence Service Corporation

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

   

Nine months ended

September 30,

 
   

2013

   

2012

 

Operating activities

               

Net income

  $ 16,081     $ 5,617  

Adjustments to reconcile net income to net cash provided by operating activities:

               

Depreciation

    5,802       5,578  

Amortization

    5,386       5,676  

Amortization of deferred financing costs

    746       865  

Loss on extinguishment of debt

    525       -  

Provision for doubtful accounts

    2,570       1,418  

Deferred income taxes

    1,395       (420 )

Stock based compensation

    2,402       3,586  

Excess tax benefit upon exercise of stock options

    (999 )     (60 )

Asset impairment charge

    492       2,506  

Other

    352       (33 )

Changes in operating assets and liabilities:

               

Accounts receivable

    5,033       (10,304 )

Management fee receivable

    105       849  

Other receivables

    237       (509 )

Restricted cash

    (255 )     14  

Prepaid expenses and other

    (6,031 )     (3,556 )

Reinsurance liability reserve

    2,720       1,773  

Accounts payable and accrued expenses

    15,744       3,040  

Accrued transportation costs

    (4,906 )     16,901  

Deferred revenue

    (1,792 )     3,639  

Other long-term liabilities

    52       3,357  

Net cash provided by operating activities

    45,659       39,937  

Investing activities

               

Purchase of property and equipment, net

    (6,413 )     (7,565 )

Acquisition of businesses, net of cash acquired

    -       (190 )

Restricted cash for reinsured claims losses

    (5,040 )     1,269  

Purchase of short-term investments, net

    (23 )     452  

Net cash used in investing activities

    (11,476 )     (6,034 )

Financing activities

               

Repurchase of common stock for treasury

    (454 )     (3,658 )

Proceeds from common stock issued pursuant to stock option exercise

    9,244       258  

Excess tax benefit upon exercise of stock options

    999       60  

Proceeds from long-term debt

    76,000       -  

Repayment of long-term debt

    (82,500 )     (9,993 )

Debt financing costs

    (2,083 )     (53 )

Capital lease payments

    (8 )     (20 )

Net cash provided by (used in) financing activities

    1,198       (13,406 )

Effect of exchange rate changes on cash

    (141 )     76  

Net change in cash

    35,240       20,573  

Cash at beginning of period

    55,863       43,184  

Cash at end of period

  $ 91,103     $ 63,757  

 

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Providence Service Corporation

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The Providence Service Corporation

Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA

(in thousands)

(Unaudited)

 

   

Three months ended

September 30,

   

Nine months ended

September 30,

 
   

2013

   

2012

   

2013

   

2012

 
                                 

Net income

  $ 3,527     $ 1,158     $ 16,081     $ 5,617  
                                 

Interest expense, net

    1,876       1,965       5,315       5,697  

Provision for income taxes

    2,048       1,859       10,612       4,631  

Depreciation and amortization

    3,725       4,018       11,188       11,254  
                                 

EBITDA

    11,176       9,000       43,196       27,199  
                                 

Asset impairment charge

    -       2,506       492       2,506  

Loss on extinguishment of debt

    525       -       525       -  

Strategic alternatives costs

    -       2       -       593  
                                 

Adjusted EBITDA

  $ 11,701     $ 11,508     $ 44,213     $ 30,298  

 

 

 

 

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