Attached files
| file | filename |
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| EX-99.2 - EX-99.2 - ModivCare Inc | investorpresentation-fou.htm |
| 8-K - 8-K - ModivCare Inc | prsc-20200227.htm |
The Providence Service Corporation Reports Fourth Quarter and Full Year 2019 Results
ATLANTA, GA – February 27, 2020 – The Providence Service Corporation (the “Company” or “Providence”) (Nasdaq: PRSC), the nation's largest provider of non-emergency medical transportation ("NEMT") programs and holder of a minority interest in Matrix Medical Network, today reported financial results for the quarter and year ended December 31, 2019.
Daniel E. Greenleaf, President and Chief Executive Officer, commented, “In the fourth quarter of 2019, Providence delivered strong revenue growth of 6.7%, net loss from continuing operations of $11.4 million and Adjusted EBITDA of $10.2 million. During the quarter, in response to higher transportation cost experienced throughout the year, the team remained focused on operational execution. This included a focus on network development to drive a more robust and competitive transportation network. On revenue, we were able to successfully renegotiate several contracts which contributed $4.0 million of in-quarter benefit.”
He continued, “For the year, our revenue grew by $125.0 million, or 9.0%, reflecting the mission-critical nature of our services to payors and members. Since joining the Company in December, I have been impressed by our team's unwavering commitment to serving our members. Looking ahead, I see compelling opportunities to leverage our leadership position in NEMT to drive continued revenue growth, sustainable margin expansion, value to our shareholders, and improved quality of life and better health outcomes for our members.”
Fourth Quarter 2019 Highlights
•Revenue from continuing operations of $384.8 million, an increase of 6.7% from the fourth quarter of 2018
•Loss from continuing operations, net of tax, of $11.4 million, or loss of $0.97 per diluted common share
•Adjusted EBITDA of $10.2 million, Adjusted Net Income of $7.9 million and Adjusted EPS of $0.45
•Matrix, on a standalone basis, recorded a net loss of $54.3 million, which included a pre-tax asset impairment charge of $55.1 million, and Adjusted EBITDA of $6.3 million
2019 Highlights
•Revenue from continuing operations of $1.51 billion, an increase of 9.0% from 2018
•Loss from continuing operations, net of tax, of $5.0 million, or loss of $0.72 per diluted common share
•Adjusted EBITDA of $51.2 million, Adjusted Net Income of $29.2 million and Adjusted EPS of $1.65
•Net cash provided by operating activities of $60.9 million
•Unrestricted Cash of $61.4 million in 2019 compared to $5.7 million in 2018
•Matrix, on a standalone basis, recorded a net loss of $69.4 million, which included a pre-tax asset impairment charge of $55.1 million, and Adjusted EBITDA of $44.0 million
Fourth Quarter 2019 Results
For the fourth quarter of 2019, the Company reported revenue of $384.8 million, an increase of 6.7% from $360.8 million in the fourth quarter of 2018.
Operating income was $7.6 million, or 2.0% of revenue, in the fourth quarter of 2019, compared to operating loss of $0.7 million, or negative 0.2% of revenue, in the fourth quarter of 2018. Loss from continuing operations, net of tax, in the fourth quarter of 2019 was $11.4 million, or $0.97 loss per diluted common share, compared to loss from continuing operations, net of tax, of $1.5 million, or $0.20 loss per diluted common share, in the fourth quarter of 2018.
Adjusted EBITDA was $10.2 million, or 2.6% of revenue, in the fourth quarter of 2019, compared to $27.3 million, or 7.6% of revenue, in the fourth quarter of 2018.
Adjusted Net Income in the fourth quarter of 2019 was $7.9 million, or $0.45 earnings per diluted common share, compared to $17.2 million, or $1.08 earnings per diluted common share, in the fourth quarter of 2018.
The quarter-over-quarter increase in revenue was a result of increased volume within existing contracts as well as rate changes and a new managed care organization ("MCO") contract in Minnesota. These increases were partially offset by the impact of contracts the Company no longer serves, including a state contract in Rhode Island and MCO contracts in California, Florida and New Mexico.
Adjusted EBITDA decreased in the fourth quarter of 2019 versus the fourth quarter of 2018 primarily due to increased transportation costs on a per trip basis in addition to higher utilization across multiple at-risk contracts.
Matrix - Equity Investment
For the fourth quarter of 2019, Matrix recorded revenue of $64.6 million, a decrease of 1.8% from $65.7 million in the fourth quarter of 2018. Matrix had an operating loss of $60.5 million for the fourth quarter of 2019, primarily as a result of asset impairment charges of $55.1 million compared to an operating loss of $6.5 million in the fourth quarter of 2018. Providence recorded a loss in equity earnings of $23.5 million related to its Matrix equity investment for the fourth quarter of 2019 compared to a loss of $2.1 million for the fourth quarter of 2018.
In the fourth quarter of 2019, Matrix had Adjusted EBITDA of $6.3 million or 9.8% of revenue, compared to $12.5 million, or 18.9% of revenue, in the fourth quarter of 2018.
Adjusted EBITDA was impacted by higher direct and indirect costs, compared to the fourth quarter of 2018.
As of December 31, 2019, Providence's ownership interest and equity investment in Matrix was 43.6% and $130.9 million, respectively.
Investor Presentation and Conference Call
Providence will hold a conference call to discuss its financial results on February 27, 2020 at 8:00 a.m. ET. An investor presentation has been prepared to accompany the conference call and can be found on the Company’s website (investor.prscholdings.com). To access the call, please dial:
US toll-free: 1 (844) 244 3865
International: 1 (518) 444 0681
Passcode: 5959714
Replay (available until March 5, 2020):
US toll-free: 1 (855) 859 2056
International: 1 (404) 537 3406
Passcode: 5959714
You may also access the conference call via webcast at investor.prscholdings.com, where the call also will be archived.
About Providence
The Providence Service Corporation, through its fully-owned subsidiaries LogistiCare Solutions, LLC and Circulation, Inc., is the nation's largest manager of non-emergency medical transportation programs for state governments and managed care organizations. Its range of services includes call center management, network credentialing, vendor payment management and non-emergency medical transport management. The Company also holds a minority interest in Matrix Medical Network which provides a broad array of assessment and care management services to individuals that improve health outcomes and health plan financial performance. For more information, please visit prscholdings.com.
Non-GAAP Financial Measures and Adjustments
In addition to the financial results prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), this press release includes EBITDA and Adjusted EBITDA for the Company and its segments, and Adjusted Net Income and Adjusted EPS for the Company, which are performance measures that are not recognized under GAAP. EBITDA is defined as income (loss) from continuing operations, net of taxes, before: (1) interest expense, net, (2) provision (benefit) for income taxes and (3) depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before certain items, including (as applicable): (1) restructuring and related charges, including costs related to our corporate reorganization, (2) equity in net loss of investee, (3) certain litigation related expenses, settlement income or other negotiated settlements relating to certain matters from prior periods, (4) certain transaction and related costs, (5) asset impairment charges, and (6) gain on remeasurement of cost investment. Adjusted Net Income is defined as income (loss) from continuing operations, net of taxes, before certain items, including (1) restructuring and related charges, (2) equity in net loss of investee, (3) certain litigation related expenses, settlement income or other negotiated settlements relating to certain matters from prior periods, (4) intangible asset amortization, (5) certain transaction and related costs, (6) asset impairment charges, (7) gain on remeasurement of cost investment, and (8) the income tax impact of such adjustments. Adjusted EPS is calculated as Adjusted Net Income less (as applicable): (1) dividends on convertible preferred stock and (2) adjusted net income allocated to participating stockholders, divided by the diluted weighted-average number of common shares outstanding as calculated for Adjusted Net Income. We utilize these non-GAAP performance measures, which exclude certain expenses and amounts, because we believe the timing of such expenses is unpredictable and not driven by our core operating results, and therefore render comparisons with prior periods as well as with other companies in our industry less meaningful. We believe such measures allow investors to gain a better understanding of the factors and trends affecting the ongoing operations of our business. We consider our core operations to be the ongoing activities to provide services from which we earn revenue, including direct operating costs and indirect costs to support these activities. In addition, our net loss in equity investee is excluded from these measures, as we do not have the ability to manage these ventures, allocate resources within the ventures, or directly control their operations or performance.
Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because they are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies, and exclude expenses that may have a material impact on our reported financial results. The presentation of non-GAAP financial information is not meant to be considered in isolation from or as a substitute for the directly comparable financial measures prepared in accordance
with GAAP. We urge you to review the reconciliations of our non-GAAP financial measures to the comparable GAAP financial measures included below, and not to rely on any single financial measure to evaluate our business.
Forward-Looking Statements
Certain statements contained in this press release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are predictive in nature and are frequently identified by the use of terms such as "may," "will," "should," "expect," "believe," "estimate," "intend," and similar words indicating possible future expectations, events or actions. Such forward-looking statements are based on current expectations, assumptions, estimates and projections about our business and our industry, and are not guarantees of our future performance. These statements are subject to a number of known and unknown risks, uncertainties and other factors, many of which are beyond our ability to control or predict, which may cause actual events to be materially different from those expressed or implied herein, including but not limited to: the early termination for non-renewal of contracts; our ability to successfully respond to governmental requests for proposal; our ability to fulfill our contractual obligations; our ability to identify and successfully complete and integrate acquisitions; our ability to identify and realize the benefits of strategic initiatives; the loss of any of the significant payors from whom we generate a significant amount of our revenue; our ability to accurately estimate the cost of performing under certain capitated contracts; our ability to match the timing of the costs of new contracts with its related revenue; the outcome of pending or future litigation; our ability to attract and retain senior management and other qualified employees; our ability to successfully complete recent divestitures or business termination; the accuracy of representations and warranties and strength of related indemnities provided to us in acquisitions or claims made against us for representations and warranties and related indemnities in our dispositions; our ability to effectively compete in the marketplace; inadequacies in or security breaches of our information technology systems, including our ability to protect private data; seasonal fluctuations in our operations; impairment of long-lived assets; the adequacy of our insurance coverage for automobile, general liability, professional liability and workers’ compensation; damage to our reputation by inaccurate, misleading or negative media coverage; our ability to comply with government healthcare and other regulations; changes in budgetary priorities of government entities that fund our services; failure to adequately comply with patient and service user information regulations; possible actions under Medicare and Medicaid programs for false claims or recoupment of funds for noncompliance; changes in the regulatory landscape applicable to Matrix; changes to our estimated income tax liability from audits or otherwise; our ability to meet restrictive covenants in our credit agreement; restrictions in the terms of our preferred stock; the costs of complying with public company reporting obligations; and the accuracy of our accounting estimates and assumptions.
The Company has provided additional information in our annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. We undertake no obligation to update or revise any forward- looking statements contained in this release, whether as a result of new information, future events or otherwise, except as required by applicable law.
Investor Relations Contact
Kalle Ahl, The Equity Group
(212) 836-9614
kahl@equityny.com
The Providence Service Corporation
Page 5
| The Providence Service Corporation | ||||||||||||||||||||||||||
| Unaudited Condensed Consolidated Statements of Operations | ||||||||||||||||||||||||||
| (in thousands except share and per share data) | ||||||||||||||||||||||||||
| Quarter ended December 31, | Year ended December 31, | |||||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||
| Service revenue, net | $ | 384,833 | $ | 360,762 | $ | 1,509,944 | $ | 1,384,965 | ||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Service expense | 358,436 | 319,241 | 1,401,152 | 1,253,608 | ||||||||||||||||||||||
| General and administrative expense | 15,003 | 24,011 | 67,244 | 77,093 | ||||||||||||||||||||||
| Asset impairment charge | — | 13,497 | — | 14,175 | ||||||||||||||||||||||
| Depreciation and amortization | 3,840 | 4,706 | 16,816 | 15,813 | ||||||||||||||||||||||
| Total operating expenses | 377,279 | 361,455 | 1,485,212 | 1,360,689 | ||||||||||||||||||||||
| Operating income (loss) | 7,554 | (693) | 24,732 | 24,276 | ||||||||||||||||||||||
| Other expenses (income): | ||||||||||||||||||||||||||
| Interest expense, net | 57 | 976 | 850 | 1,783 | ||||||||||||||||||||||
| Other income | (78) | — | (277) | — | ||||||||||||||||||||||
| Equity in net loss of investee | 23,526 | 2,052 | 29,685 | 6,158 | ||||||||||||||||||||||
| Gain on remeasurement of cost method investment | — | — | — | (6,577) | ||||||||||||||||||||||
(Loss) income from continuing operations before income taxes | (15,951) | (3,721) | (5,526) | 22,912 | ||||||||||||||||||||||
| (Benefit) provision for income taxes | (4,513) | (2,267) | (573) | 4,684 | ||||||||||||||||||||||
| (Loss) income from continuing operations, net of tax | (11,438) | (1,454) | (4,953) | 18,228 | ||||||||||||||||||||||
| Income (loss) from discontinued operations, net of tax | 5,380 | (19,026) | 5,919 | (37,053) | ||||||||||||||||||||||
| Net (loss) income | (6,058) | (20,480) | 966 | (18,825) | ||||||||||||||||||||||
Net income (loss) from discontinued operations attributable to noncontrolling interest | — | 130 | — | (156) | ||||||||||||||||||||||
| Net (loss) income attributable to Providence | $ | (6,058) | $ | (20,350) | $ | 966 | $ | (18,981) | ||||||||||||||||||
Net loss attributable to common stockholders | $ | (7,167) | $ | (21,462) | $ | (3,437) | $ | (25,257) | ||||||||||||||||||
| Basic (loss) earnings per common share: | ||||||||||||||||||||||||||
| Continuing operations | $ | (0.97) | $ | (0.20) | $ | (0.72) | $ | 0.92 | ||||||||||||||||||
| Discontinued operations | 0.42 | (1.47) | 0.46 | (2.87) | ||||||||||||||||||||||
| Basic loss per common share | $ | (0.55) | $ | (1.67) | $ | (0.26) | $ | (1.95) | ||||||||||||||||||
| Diluted (loss) earnings per common share: | ||||||||||||||||||||||||||
| Continuing operations | $ | (0.97) | (0.20) | $ | (0.72) | $ | 0.92 | |||||||||||||||||||
| Discontinued operations | 0.42 | (1.47) | 0.46 | (2.86) | ||||||||||||||||||||||
| Diluted loss per common share | $ | (0.55) | $ | (1.67) | $ | (0.26) | $ | (1.94) | ||||||||||||||||||
| Weighted-average number of common | ||||||||||||||||||||||||||
| shares outstanding: | ||||||||||||||||||||||||||
| Basic | 12,982,731 | 12,867,169 | 12,958,713 | 12,960,837 | ||||||||||||||||||||||
| Diluted | 12,982,731 | 12,867,169 | 12,958,713 | 13,033,247 | ||||||||||||||||||||||
The Providence Service Corporation
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| The Providence Service Corporation | ||||||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||||||
| (in thousands) | ||||||||||||||
| December 31, 2019 | December 31, 2018 | |||||||||||||
| Assets | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 61,365 | $ | 5,678 | ||||||||||
| Accounts receivable, net of allowance | 180,416 | 147,756 | ||||||||||||
| Other current assets (1) | 14,491 | 50,495 | ||||||||||||
| Current assets of discontinued operations (2) | 155 | 7,051 | ||||||||||||
| Total current assets | 256,427 | 210,980 | ||||||||||||
| Operating lease right-of-use assets | 20,095 | — | ||||||||||||
| Property and equipment, net | 23,243 | 22,965 | ||||||||||||
| Goodwill and intangible assets, net | 155,127 | 161,362 | ||||||||||||
| Equity investment | 130,869 | 161,503 | ||||||||||||
| Other long-term assets (3) | 11,620 | 12,835 | ||||||||||||
| Total assets | $ | 597,381 | $ | 569,645 | ||||||||||
| Liabilities, redeemable convertible preferred stock and stockholders' equity | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Current portion of long-term obligations | $ | 308 | $ | 718 | ||||||||||
| Current portion of operating lease liabilities | 6,730 | — | ||||||||||||
| Other current liabilities (4) | 141,718 | 138,908 | ||||||||||||
| Current liabilities of discontinued operations (2) | 1,430 | 3,257 | ||||||||||||
| Total current liabilities | 150,186 | 142,883 | ||||||||||||
| Long-term obligations, less current portion | 45 | 353 | ||||||||||||
| Operating lease liabilities, less current portion | 14,502 | — | ||||||||||||
| Other long-term liabilities (5) | 37,936 | 38,019 | ||||||||||||
| Total liabilities | 202,669 | 181,255 | ||||||||||||
| Mezzanine and stockholders' equity | ||||||||||||||
| Convertible preferred stock, net | 77,120 | 77,392 | ||||||||||||
| Stockholders' equity | 317,592 | 310,998 | ||||||||||||
Total liabilities, redeemable convertible preferred stock and stockholders' equity | $ | 597,381 | $ | 569,645 | ||||||||||
(1) Includes other receivables, prepaid expenses and other, and short-term restricted cash.
(2) Includes assets or liabilities primarily related to WD Services' former Saudi Arabian operation.
(3) Includes other assets and long-term restricted cash.
(4) Includes accounts payable, accrued expenses, accrued transportation costs, deferred revenue and self-funded insurance programs.
(5) Includes other long-term liabilities and deferred tax liabilities.
The Providence Service Corporation
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| The Providence Service Corporation | ||||||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||||||
| (in thousands) (1) | ||||||||||||||
| Year ended December 31, | ||||||||||||||
| 2019 | 2018 | |||||||||||||
| Operating activities | ||||||||||||||
| Net income (loss) | $ | 966 | $ | (18,825) | ||||||||||
| Depreciation and amortization | 16,816 | 27,677 | ||||||||||||
| Stock-based compensation | 5,414 | 8,993 | ||||||||||||
| Asset impairment charge | — | 23,378 | ||||||||||||
| Equity in net loss of investee | 29,685 | 6,072 | ||||||||||||
| Gain on remeasurement of cost method investment | — | (6,577) | ||||||||||||
| Other non-cash items | 4,442 | 5,676 | ||||||||||||
| Loss on sale of business, net of tax | — | 1,831 | ||||||||||||
| Changes in working capital | 3,617 | (40,326) | ||||||||||||
| Net cash provided by operating activities | 60,940 | 7,899 | ||||||||||||
| Investing activities | ||||||||||||||
| Purchase of property and equipment | (10,858) | (17,521) | ||||||||||||
| Acquisition, net of cash acquired | — | (43,711) | ||||||||||||
| Dispositions, net of cash sold | — | 12,780 | ||||||||||||
| Proceeds from note receivable | — | 3,130 | ||||||||||||
| Net cash used in investing activities | (10,858) | (45,322) | ||||||||||||
| Financing activities | ||||||||||||||
| Preferred stock dividends | (4,403) | (4,413) | ||||||||||||
| Repurchase of common stock, for treasury | (6,797) | (56,088) | ||||||||||||
Proceeds from common stock issued pursuant to stock option exercise | 11,142 | 12,413 | ||||||||||||
| Capital lease payments and other | (718) | (3,467) | ||||||||||||
| Net cash used in financing activities | (776) | (51,555) | ||||||||||||
| Effect of exchange rate changes on cash | — | (261) | ||||||||||||
| Net change in cash and cash equivalents | 49,306 | (89,239) | ||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 12,367 | 101,606 | ||||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 61,673 | $ | 12,367 | ||||||||||
(1) Includes both continuing and discontinued operations.
The Providence Service Corporation
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The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Segment Information and Adjusted EBITDA
(in thousands) (Unaudited)
| Quarter ended December 31, 2019 | ||||||||||||||||||||
| NET Services | Matrix Investment | Total Continuing Operations | ||||||||||||||||||
| Service revenue, net | $ | 384,833 | $ | — | $ | 384,833 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Service expense | 358,436 | — | 358,436 | |||||||||||||||||
| General and administrative expense | 15,003 | — | 15,003 | |||||||||||||||||
| Depreciation and amortization | 3,840 | — | 3,840 | |||||||||||||||||
| Total operating expenses | 377,279 | — | 377,279 | |||||||||||||||||
| Operating income | 7,554 | — | 7,554 | |||||||||||||||||
| Other expenses (income): | ||||||||||||||||||||
| Interest expense, net | 57 | — | 57 | |||||||||||||||||
| Other income | (78) | — | (78) | |||||||||||||||||
| Equity in net loss of investee | — | 23,526 | 23,526 | |||||||||||||||||
| Income (loss) from continuing | ||||||||||||||||||||
| operations before income taxes | 7,575 | (23,526) | (15,951) | |||||||||||||||||
| Provision (benefit) for income taxes | 1,392 | (5,905) | (4,513) | |||||||||||||||||
| Income (loss) from continuing operations, net of taxes | 6,183 | (17,621) | (11,438) | |||||||||||||||||
| Interest expense, net | 57 | — | 57 | |||||||||||||||||
| Provision (benefit) for income taxes | 1,392 | (5,905) | (4,513) | |||||||||||||||||
| Depreciation and amortization | 3,840 | — | 3,840 | |||||||||||||||||
| EBITDA | 11,472 | (23,526) | (12,054) | |||||||||||||||||
| Restructuring and related charges (1) | 1,321 | — | 1,321 | |||||||||||||||||
| Transaction cost benefits (2) | (2,595) | — | (2,595) | |||||||||||||||||
| Equity in net loss of investee | — | 23,526 | 23,526 | |||||||||||||||||
| Adjusted EBITDA | $ | 10,198 | $ | — | $ | 10,198 | ||||||||||||||
(1) Restructuring and related charges include professional services costs of $853, organizational consolidation costs of $312 and severance costs of $156.
(2) Transaction cost benefits related to a positive adjustment from the amendment of the Circulation management incentive plan ("MIP").
The Providence Service Corporation
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The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Segment Information and Adjusted EBITDA
(in thousands) (Unaudited)
| Quarter ended December 31, 2018 | |||||||||||||||||||||||
| NET Services | Matrix Investment | Total Continuing Operations | |||||||||||||||||||||
| Service revenue, net | $ | 360,762 | $ | — | $ | 360,762 | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Service expense | 319,241 | — | 319,241 | ||||||||||||||||||||
| General and administrative expense | 24,011 | — | 24,011 | ||||||||||||||||||||
| Asset impairment charge | 13,497 | — | 13,497 | ||||||||||||||||||||
| Depreciation and amortization | 4,706 | — | 4,706 | ||||||||||||||||||||
| Total operating expenses | 361,455 | — | 361,455 | ||||||||||||||||||||
| Operating loss | (693) | — | (693) | ||||||||||||||||||||
| Other expenses: | |||||||||||||||||||||||
| Interest expense, net | 976 | — | 976 | ||||||||||||||||||||
| Equity in net loss of investee | — | 2,052 | 2,052 | ||||||||||||||||||||
| Loss from continuing | |||||||||||||||||||||||
| operations, before income tax | (1,669) | (2,052) | (3,721) | ||||||||||||||||||||
| Benefit for income taxes | (1,487) | (780) | (2,267) | ||||||||||||||||||||
| Loss from continuing operations, net of taxes | (182) | (1,272) | (1,454) | ||||||||||||||||||||
| Interest expense, net | 976 | — | 976 | ||||||||||||||||||||
| Benefit for income taxes | (1,487) | (780) | (2,267) | ||||||||||||||||||||
| Depreciation and amortization | 4,706 | — | 4,706 | ||||||||||||||||||||
| EBITDA | 4,013 | (2,052) | 1,961 | ||||||||||||||||||||
| Asset impairment charge | 13,497 | — | 13,497 | ||||||||||||||||||||
| Restructuring and related charges (1) | 4,424 | — | 4,424 | ||||||||||||||||||||
| Transaction costs (2) | 5,417 | — | 5,417 | ||||||||||||||||||||
| Equity in net loss of investee | — | 2,052 | 2,052 | ||||||||||||||||||||
| Other | (8) | — | (8) | ||||||||||||||||||||
| Adjusted EBITDA | $ | 27,343 | $ | — | $ | 27,343 | |||||||||||||||||
(1) Restructuring and related charges include organizational consolidation costs of $3,489, value enhancement initiative implementation costs of $587 and severance costs of $348.
(2) Transaction costs include deal costs and MIP related to the acquisition of Circulation and certain other transaction related expenses.
The Providence Service Corporation
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The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Segment Information and Adjusted EBITDA
(in thousands) (Unaudited)
| Year ended December 31, 2019 | ||||||||||||||||||||
| NET Services | Matrix Investment | Total Continuing Operations | ||||||||||||||||||
| Service revenue, net | $ | 1,509,944 | $ | — | $ | 1,509,944 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Service expense | 1,401,152 | — | 1,401,152 | |||||||||||||||||
| General and administrative expense | 67,244 | — | 67,244 | |||||||||||||||||
| Depreciation and amortization | 16,816 | — | 16,816 | |||||||||||||||||
| Total operating expenses | 1,485,212 | — | 1,485,212 | |||||||||||||||||
| Operating income | 24,732 | — | 24,732 | |||||||||||||||||
| Other expenses (income): | ||||||||||||||||||||
| Interest expense, net | 850 | — | 850 | |||||||||||||||||
| Other income | (277) | — | (277) | |||||||||||||||||
| Equity in net loss of investee | — | 29,685 | 29,685 | |||||||||||||||||
| Income (loss) from continuing | ||||||||||||||||||||
| operations before income tax | 24,159 | (29,685) | (5,526) | |||||||||||||||||
| Provision (benefit) for income taxes | 6,877 | (7,450) | (573) | |||||||||||||||||
| Income (loss) from continuing operations, net of taxes | 17,282 | (22,235) | (4,953) | |||||||||||||||||
| Interest expense, net | 850 | — | 850 | |||||||||||||||||
| Provision (benefit) for income taxes | 6,877 | (7,450) | (573) | |||||||||||||||||
| Depreciation and amortization | 16,816 | — | 16,816 | |||||||||||||||||
| EBITDA | 41,825 | (29,685) | 12,140 | |||||||||||||||||
| Restructuring and related charges (1) | 6,691 | — | 6,691 | |||||||||||||||||
| Transaction costs (2) | 2,693 | — | 2,693 | |||||||||||||||||
| Equity in net loss of investee | — | 29,685 | 29,685 | |||||||||||||||||
| Litigation expense | 9 | — | 9 | |||||||||||||||||
| Adjusted EBITDA | $ | 51,218 | $ | — | $ | 51,218 | ||||||||||||||
(1) Restructuring and related charges include organizational consolidation costs of $4,027, severance costs of $1,673, and professional services of $991.
(2) Transaction costs include certain transaction-related expenses and Circulation MIP.
The Providence Service Corporation
Page 11
The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Segment Information and Adjusted EBITDA
(in thousands) (Unaudited)
| Year ended December 31, 2018 | ||||||||||||||||||||
| NET Services | Matrix Investment | Total Continuing Operations | ||||||||||||||||||
| Service revenue, net | $ | 1,384,965 | $ | — | $ | 1,384,965 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Service expense | 1,253,608 | — | 1,253,608 | |||||||||||||||||
| General and administrative expense | 77,093 | — | 77,093 | |||||||||||||||||
| Asset impairment charge | 14,175 | — | 14,175 | |||||||||||||||||
| Depreciation and amortization | 15,813 | — | 15,813 | |||||||||||||||||
| Total operating expenses | 1,360,689 | — | 1,360,689 | |||||||||||||||||
| Operating income | 24,276 | — | 24,276 | |||||||||||||||||
| Other expenses: | ||||||||||||||||||||
| Interest expense, net | 1,783 | — | 1,783 | |||||||||||||||||
| Equity in net loss of investee | — | 6,158 | 6,158 | |||||||||||||||||
| Gain on remeasurement of cost method investment | (6,577) | — | (6,577) | |||||||||||||||||
| Income (loss) from continuing | ||||||||||||||||||||
| operations, before income tax | 29,070 | (6,158) | 22,912 | |||||||||||||||||
| Provision (benefit) for income taxes | 6,248 | (1,564) | 4,684 | |||||||||||||||||
| Income (loss) from continuing operations, net of taxes | 22,822 | (4,594) | 18,228 | |||||||||||||||||
| Interest expense, net | 1,783 | — | 1,783 | |||||||||||||||||
| Provision (benefit) for income taxes | 6,248 | (1,564) | 4,684 | |||||||||||||||||
| Depreciation and amortization | 15,813 | — | 15,813 | |||||||||||||||||
| EBITDA | 46,666 | (6,158) | 40,508 | |||||||||||||||||
| Asset impairment charge | 14,175 | — | 14,175 | |||||||||||||||||
| Restructuring and related charges (1) | 11,546 | — | 11,546 | |||||||||||||||||
| Transaction costs (2) | 7,231 | — | 7,231 | |||||||||||||||||
| Equity in net loss of investee | — | 6,158 | 6,158 | |||||||||||||||||
| Gain on remeasurement of cost investment | (6,577) | — | (6,577) | |||||||||||||||||
| Litigation income (3) | (226) | — | (226) | |||||||||||||||||
| Adjusted EBITDA | $ | 72,815 | $ | — | $ | 72,815 | ||||||||||||||
(1) Restructuring and related charges include organizational consolidation costs of $8,361, value enhancement initiative implementation costs of $2,837 and severance costs of $348.
(2) Transaction costs include deal costs and MIP related to the acquisition of Circulation and certain other transaction related expenses.
(3) Resolution of accruals related to defense cost for a putative stockholder class action derivative complaint.
The Providence Corporation
Page 12
The Providence Service Corporation
Summary Financial Information of Equity Investment in Matrix Medical Network (1)
(in thousands)
(Unaudited)
| Quarter ended December 31, | Year ended December 31, | |||||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||
| Revenue | $ | 64,584 | $ | 65,746 | $ | 275,391 | $ | 282,067 | ||||||||||||||||||
| Operating expense | 115,122 | 57,073 | 292,725 | 240,134 | ||||||||||||||||||||||
| Depreciation and amortization | 9,920 | 15,150 | 43,666 | 43,119 | ||||||||||||||||||||||
| Operating loss | (60,458) | (6,477) | (61,000) | (1,186) | ||||||||||||||||||||||
| Interest expense | 5,889 | 3,506 | 24,902 | 25,942 | ||||||||||||||||||||||
| Benefit for income taxes | (12,048) | (3,758) | (16,549) | (7,166) | ||||||||||||||||||||||
| Net loss | (54,299) | (6,225) | (69,353) | (19,962) | ||||||||||||||||||||||
| Interest | 43.6 | % | 43.6 | % | 43.6 | % | 43.6 | % | ||||||||||||||||||
| Net loss - Equity Investment | $ | (23,665) | $ | (2,714) | $ | (30,226) | $ | (8,703) | ||||||||||||||||||
| Management fee and other | 139 | 662 | 541 | 2,545 | ||||||||||||||||||||||
| Equity in net loss of investee | $ | (23,526) | $ | (2,052) | $ | (29,685) | $ | (6,158) | ||||||||||||||||||
| Net Debt (2) | $ | 294,167 | $ | 304,425 | ||||||||||||||||||||||
(1)The results of our equity method investment are excluded from the calculation of Providence's Adjusted EBITDA and Adjusted Net Income.
(2)Net debt represents long-term debt, excluding deferred financing costs, less cash.
The Providence Service Corporation
Page 13
The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA: Matrix Medical Network (1)
(in thousands) (Unaudited)
| Quarter ended December 31, | Year ended December 31, | ||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
| Revenue | $ | 64,584 | $ | 65,746 | $ | 275,391 | $ | 282,067 | |||||||||||||||
| Operating expense | 115,122 | 57,073 | 292,725 | 240,134 | |||||||||||||||||||
| Depreciation and amortization | 9,920 | 15,150 | 43,666 | 43,119 | |||||||||||||||||||
| Operating loss | (60,458) | (6,477) | (61,000) | (1,186) | |||||||||||||||||||
| Interest expense | 5,889 | 3,506 | 24,902 | 25,942 | |||||||||||||||||||
| Benefit for income taxes | (12,048) | (3,758) | (16,549) | (7,166) | |||||||||||||||||||
| Net loss | (54,299) | (6,225) | (69,353) | (19,962) | |||||||||||||||||||
| Depreciation and amortization | 9,920 | 15,150 | 43,666 | 43,119 | |||||||||||||||||||
| Interest expense | 5,889 | 3,506 | 24,902 | 25,942 | |||||||||||||||||||
| Benefit for income taxes | (12,048) | (3,758) | (16,549) | (7,166) | |||||||||||||||||||
| EBITDA | (50,538) | 8,673 | (17,334) | 41,933 | |||||||||||||||||||
| Asset impairment charge | 55,056 | — | 55,056 | — | |||||||||||||||||||
| Management fees | 398 | 550 | 2,196 | 4,887 | |||||||||||||||||||
| Acquisition costs | — | — | — | 2,341 | |||||||||||||||||||
| Integration costs | — | 2,231 | 1,488 | 6,524 | |||||||||||||||||||
| Severance costs | 1,122 | — | 1,893 | — | |||||||||||||||||||
| Transaction costs | 302 | 1,004 | 721 | 1,010 | |||||||||||||||||||
| Adjusted EBITDA | $ | 6,340 | $ | 12,458 | $ | 44,020 | $ | 56,695 | |||||||||||||||
(1) Providence accounts for its proportionate share of Matrix's results using the equity method. Matrix's Adjusted EBITDA is not included within Providence's Adjusted EBITDA in any period presented.
The Providence Service Corporation
Page 14
The Providence Service Corporation
Reconciliation of Non-GAAP Financial Measures
Adjusted Net Income and Adjusted Net Income per Common Share
(in thousands, except share and per share data)
(Unaudited)
| Quarter ended December 31, | Year ended December 31, | |||||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||
| Loss from continuing operations, net of tax | $ | (11,438) | $ | (1,454) | $ | (4,953) | $ | 18,228 | ||||||||||||||||||
| Asset impairment charge | — | 13,497 | — | 14,175 | ||||||||||||||||||||||
| Restructuring and related charges, including accelerated depreciation related to the organizational consolidation (1) | 1,321 | 4,569 | 7,007 | 11,984 | ||||||||||||||||||||||
| Transaction costs (2) | (2,595) | 5,417 | 2,693 | 7,231 | ||||||||||||||||||||||
| Equity in net loss of investee | 23,526 | 2,052 | 29,685 | 6,158 | ||||||||||||||||||||||
| Gain on remeasurement of cost method investment | — | — | — | (6,577) | ||||||||||||||||||||||
| Intangible amortization expense | 1,558 | 1,565 | 6,234 | 3,755 | ||||||||||||||||||||||
| Litigation (income) expense, net | — | (8) | 9 | (226) | ||||||||||||||||||||||
| Tax effected impact of adjustments | (4,459) | (8,438) | (11,448) | (9,849) | ||||||||||||||||||||||
| Adjusted Net Income | 7,913 | 17,200 | 29,227 | 44,879 | ||||||||||||||||||||||
| . | ||||||||||||||||||||||||||
| Dividends on convertible preferred stock | (1,108) | (1,112) | (4,403) | (4,420) | ||||||||||||||||||||||
| Income allocated to participating securities | (910) | (2,174) | (3,324) | (5,438) | ||||||||||||||||||||||
| Adjusted Net Income available to common stockholders | $ | 5,895 | $ | 13,914 | $ | 21,500 | $ | 35,021 | ||||||||||||||||||
| Adjusted EPS | $ | 0.45 | $ | 1.08 | $ | 1.65 | $ | 2.69 | ||||||||||||||||||
| Diluted weighted-average number of common shares outstanding | 13,032,551 | 12,926,598 | 13,009,141 | 13,033,247 | ||||||||||||||||||||||
(1) Restructuring and related charges include value enhancement implementation costs, severance, organization consolidation costs and professional fees.
(2) Transaction costs include deal costs and MIP related to Circulation acquisition and certain other transaction-related expenses.
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